Investors Cautious Before Final UK PMIs Today, Euro (EUR) Rising with ECB Optimism
After a limited resurgence throughout the latter half of yesterday the GBP/EUR pairing is back on a downtrend this morning ahead as traders hedge their bets against another disappointing number on the UK Services PMI. Sentiment seems fairly positive with regards to the upcoming European Central Bank (ECB) Rate Decision, giving a boost to the common currency (EUR) in advance of the announcement. At present the GBP/EUR exchange rate is moving in the region of 1.3603.
More disappointment on the performance of the UK economy today as the domestic Construction PMI clocked in below forecast, prompting the Pound (GBP) to remain dovish against the Euro (GBP/EUR).
Improved Eurozone Unemployment Data and Worse-than-Expected UK Manufacturing PMI Pushed GBP/EUR Exchange Rate to Three-Month Low
Yesterday proved to be a somewhat mixed day for Eurozone data, prompting a fresh round of turbulence for the GBP/EUR exchange rate. Early German figures came in strongly with a stable Unemployment Rate and better-than-anticipated Unemployment Change, which swiftly weighed on the pairing to push it down to 1.3567. As European stocks returned to the red on the back of further global worries, however, the strength of the Euro (EUR) was soon undermined by an overall disappointing raft of Manufacturing PMIs, with France and Greece leading the contractions. Although Germany, again, proved more robust than expected with definite growth in production, the Eurozone’s composite fell to 52.3 from the previous month’s 52.4.
While UK Mortgage Approvals rose the Pound (GBP) was denied any significant rally as the domestic Manufacturing PMI fell short, contracting to 51.5 rather than posting minor growth at 52 as had been forecast. This naturally appeared to confirm fears that the UK economy is not quite so sheltered from the current global slowdown as Bank of England (BoE) Governor Mark Carney would have traders believe. Compounding the resultant softening, the Eurozone’s Unemployment Rate dropped to 10.9%, its lowest level since 2012. Consequently the GBP/EUR pairing was catapulted to a fresh three-month low of 1.3523.
Sterling (GBP) Remains Soft with Shortfall on Today’s UK Construction PMI as European Markets Edge into the Green
Following another day of losses on the global stock markets this morning has seen both the FTSE 100 and other European indices making limited gains in spite of another poor Manufacturing PMI from China and sustained Asian share falls. In anticipation of the UK Construction PMI the GBP/EUR conversion rate was trending bearishly, with investors wary of the prospect of another potential shortfall in the domestic economic performance. This caution was shortly proven justified as the figure printed at 57.3, an improvement on the previous month but equally less optimistic than had been forecast; this was yet another blow to the general faith in the recovery of the UK’s economy.
GBP/EUR Exchange Rate Forecast: Pound Hoping for Resurgence on Services PMI
With the UK Services PMI due out tomorrow, this being the sector which accounts for the largest proportion of the nation’s GDP, Sterling could be in reach of a more substantial turnaround. A strong enough performance on this figure should boost the domestic composite and possibly outweigh much of the damage in confidence that has been caused by previous results.
Of greater impact to the outlook of the GBP/EUR pairing, however, will be Thursday afternoon’s European Central Bank (ECB) Rate Decision. After the recent pressure of the Chinese slowdown and its effect on the global economy, the potential still remains for the announcement of fresh monetary loosening measures, particularly with the recent manufacturing disappointment for the majority of the Eurozone. Nevertheless, any movement of this sort would undeniably damage the recent bullishness of the common currency, further decreasing its appeal to pundits looking to profit-take.
Current GBP, EUR Exchange Rates
At time of writing the Pound Sterling to Euro (GBP/EUR) exchange rate is trending narrowly at 1.3559, while the Euro to Pound Sterling (EUR/GBP) pairing is experiencing a slight downtrend around 0.7373.