Pound To Euro Exchange Rate Muted Following UK PMI

GBP/EUR Exchange Rate Rangebound following UK PMI

The Pound Euro (GBP/EUR) exchange rate traded in a narrow range on Wednesday following the release of the latest UK manufacturing PMI data.

At the time of writing, GBP/EUR traded at around €1.1697, virtually unchanged from Wednesday’s opening rate.

The Pound (GBP) struggled to catch bids on Wednesday and remained flat against the majority of its peers following the release of the UK’s finalised manufacturing PMI for April.

April’s finalised index slipped to 49.1 from 50.3 in the previous month, however came in above preliminary expectations it would print at 48.7.

Rob Dobson, Director at S&P Global Market Intelligence, commented: ‘The UK manufacturing sector suffered a renewed downturn in April, as output and new orders contracted following short-lived rebounds in March. The sector is still besieged by weak market confidence, client destocking and disruptions caused by the ongoing Red Sea crisis, all of which are contributing to reduced inflows of new work from domestic and overseas customers, with specific reports of difficulty securing new contract wins from Europe, the US and Asia.’

Confirmation that the sector fell back into contraction territory served to stymie GBP exchange rates in the aftermath of the release, keeping the currency treading water against the majority of its peers.

The Euro (EUR) remained trading sideways throughout Wednesday’s European session due to market closures in observance of Labour Day.

As this resulted in thin trading conditions over the day’s session, the Euro struggled to gain any ground on the European holiday.

Amid a further lack of Eurozone data releases, EUR exchange rates remained mostly unmoved during Wednesday’s session.

GBP/EUR Exchange Rate Forecast: Eurozone Unemployment in the Spotlight?

Looking ahead, the primary catalyst of movement for the pound euro exchange rate for the remainder of this week will likely be the Eurozone’s latest unemployment rate, scheduled for release on Friday.

Markets expect March’s reading to have held near record lows, and is expected to stay at 6.5% for this reading.

Should the data print as expected and confirm a robust employment sector, this in turn could give the European Central Bank (ECB) motivation to keep interest rates higher for longer, which may serve to bolster EUR exchange rates at the end of this week.

Turning to the Pound, significant data releases will remain few and far between for the remainder of the week, which may see GBP exchange rates continue to trade without as clear trajectory.

The only UK data release of note this week will come in the form of the UK’s finalised services PMI data.

Scheduled for release on Friday, the latest preliminary figures for April currently except that growth in the UK’s vital services sector increased to an 11-month.

Should the data print as expected and report further growth in the UK’s services sector, the Pound to end the week on the front foot.

Current political discourse in the UK may also serve to influence Sterling’s trajectory this week.

As rumours persist over the timing of the UK’s next general election, any unexpected announcements this week could see the Pound trade erratically against its peers.