- Single currency fluctuates on PMI data – German growth countered by Eurozone slowdown
- Markit commentary turns dovish – Concerns voiced about Eurozone slowdown
- Pound Sterling soft after ‘Brexit’ predictions – Warnings of year-long recession from Treasury
- Eurozone ZEW surveys out tomorrow – UK data to consist of borrowing stats
The Euro has made a number of gains alongside its losses against peers today, with weakness coming from earlier PMI results.
The Pound has been a similarly uncertain prospect, owing to a further ramping up of the stakes for the EU Referendum.
Eurozone Economic News: Contrasting PMI Stats Limit Euro Movement
The common currency has been mixed against its peers recently, with gains consisting of 0.3% against the Australian Dollar (EUR/AUD) and 0.4% against the Canadian Dollar (EUR/CAD) and the Polish Zloty (EUR/PLN). Equally prevalent losses have been made up of -0.3% against the Indian Rupee (EUR/INR) and -0.8% against the Japanese Yen (EUR/JPY). Against the Pound (EUR/GBP), the Euro has slipped slightly.
The greatest influencers on the Euro’s value of late have been preliminary manufacturing, services and composite PMI results for May; while Germany has posted positive, forecast-beating results, the Eurozone as a whole has actually slowed down in all three fields, although it has nonetheless managed to remain out of the sub-50 contraction range.
In a commentary attached to the latest data, Markit’s Chris Williamson said:
‘A disappointing flash Eurozone PMI for May adds further to the suggestion that the robust pace of economic growth seen in Q1 will prove temporary. The forward-looking indicators also suggest that growth is more likely to weaken…than accelerate’.
Pound Sterling Uncertain as Alarming ‘In’ Referendum Forecasts Clash with Questionable ‘Out’ Arguments
The Pound has been limited in its overall movement against the usual competition today, with losses being made up of -0.2% against the US Dollar (GBP/USD) and -0.8% against the Japanese Yen (GBP/JPY) and advances including a minor gain on the Euro (GBP/EUR) and 0.3% against the Canadian Dollar (GBP/CAD). This represents a significant slip relative to last week’s movement.
The biggest UK news of the day has revolved around the EU Referendum. On the ‘Leave’ side, recent claims that Turkey will have joined the EU within a few years, bringing with it mass-immigration to the UK, have been called into question by the lack of historical progress made in Turkey’s integration efforts.
On the ‘Remain’ side, however, the Treasury has been making headlines once again with the claim that the UK would fall into a state of recession in the event of a ‘Brexit’.
With the ‘Purdah’ period (prohibiting publication by local or central government of most Referendum data from May 27th) fast approaching, it seems likely that these arguments will only intensify as the end of the week draws closer.
Future EUR, GBP Forecast: General Eurozone, UK Borrowing Stats on Horizon
The Euro is likely to be the dominant half of the pairing for the near-future, given the clear disparity between the quality and quantity of Eurozone/UK data releases.
Looking ahead, tomorrow’s Eurozone ecostats will consist of the Finnish unemployment rate for April, Germany’s GDP growth rate finalised figure for the first quarter, the Eurozone ZEW economic sentiment index for May and a pair of speeches from European Central Bank (ECB) officials.
Finnish unemployment is expected to rise; respective gains and losses are in store for Germany’s quarterly and annual GDP results and for the Eurozone ZEW survey, a sizable increase from 21.5 points to 26.16 is anticipated.
For the UK, tomorrow morning will see the announcement of the public sector net borrowing result for April while later on the Confederation of British Industry (CBI) distributive trades outcome for May is due.
Current forecasts have been for a reduction in the amount borrowed, while the same optimism has not been applied to the gloomy trade predictions.
Current EUR, GBP Exchange Rates
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7732 and the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.2938 today.
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