EUR/GBP Exchange Rate Strengthens as Lacklustre PMI Figures Suggest UK Economy is Losing Momentum
The Euro Pound (EUR/GBP) exchange rate ticked higher on Thursday as markets reacted to the UK’s latest PMI figures.
At the time of writing EUR/GBP exchange rate is down by around 0.2% this morning as markets express concern over the slowing UK economy.
Euro Pound (EUR/GBP) Exchange Rate Buoyed by Weak UK PMI Data
The Euro Pound (EUR/GBP) exchange rate is pushing higher this morning as the UK’s latest services index capped off a trio of disappointing PMI results.
The latest survey published by IHS Markit, reveal that the UK’s service sector remained in the ‘slow lane’ last month, with the index only rising from 51.7 to 52.8, missing expectations of a slightly stronger rebound to 53.5.
Following on from a weak manufacturing PMI and a questionable rally in the construction sector, last month this has prompted concerns that the UK’s economic growth will have remained lacklustre at the start of the second quarter, applying considerable pressure to the Pound (GBP) exchange rate.
Weak Inflation Figures Temper Euro (EUR) Exchange Rate
At the same time the Euro’s (EUR) advance this morning has been tempered somewhat by the publication of the Eurozone’s latest CPI figures.
Headline inflation was revealed to have risen by 1.2% in April, down from 1.3% the previous month, although it was the core inflation figures that were most damning as underlying inflation slid from 1% to 0.7% last month.
This is likely to cause a major headache for the European Central Bank (ECB) as it targets an inflation rate of 2% and will likely see the ECB leave interest rates on hold for some time to come.
EUR/GBP Exchange Rate Forecast: Will Rising Retail Sales Strengthen the Euro?
Looking ahead the EUR/GBP exchange rate may tick higher at the end of this week’s session as the Eurozone publishes its latest retail sales figures.
Economists forecast that after struggling in recent months retailers will report a notable uptick in sales growth in March, potentially strengthening the Euro (EUR) exchange rate.
However some analysts suggest this may be a little too optimistic as they point to the adverse weather as possibly hampering sales that month.
Meanwhile GBP investors are likely to turn their attention to next week, with the Bank of England’s latest rate decision likely to prompt considerable movement in the Pound (GBP) exchange rate.
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