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GBP/EUR Exchange Rate Accelerates on Grim Eurozone Manufacturing PMI

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GBP/EUR Exchange Rate Buoyed by Contrasting PMI Figures 

The Pound to Euro (GBP/EUR) exchange rate is on the rise this morning as markets react to the UK and Eurozone’s latest manufacturing PMIs.  

At the time of writing the GBP/EUR exchange rate is trading at around €1,1313, having risen roughly 0.4% from this morning’s opening levels. 

Euro (EUR) Dented by Abysmal Eurozone Factory Activity 

The Euro (EUR) is trading on the back foot this morning as the Eurozone’s manufacturing PMI printed below expectations in March. 

According to data published by IHS Markit, the Eurozone’s manufacturing index fell to a seven-year low of 44.5 in March, printing below a preliminary estimate of 44.7 and highlighting the challenges facing the bloc’s factory sector amidst the coronavirus crisis. 

Eurozone manufacturers reported a sharp drop in new orders and output last month as much of Europe entered lockdown in an attempt to contain the coronavirus. This in turn has led to a sharp rise in jobs cuts in the sector. 

Analysts also warn the coronavirus’ impact on the Eurozone economy is likely to be more pronounced than these figures would suggest. 

Chris Williamson, Chief Business Economist at IHS Markit said:  

‘Even the slide in the PMI to a seven-and-a-half year low masks the severity of the slump in manufacturing as it includes a measure of supply chain delays, which boosted the index.  

‘The concern is that we are still some way off peak decline for manufacturing. Besides the hit to output from many factories simply closing their doors, the coming weeks will likely see both business and consumer spending on goods decline markedly as measures to contain the coronavirus result in dramatically reduced orders at those factories still operating.’ 

Pound (GBP) Buoyed by Revised PMI Figures, But Upside Limited 

At the same time, the Pound (GBP) is on the rise this morning after the UK’s own manufacturing PMI was revised slightly higher in March. 

IHS Markit reported the UK’s final factory index printed at 47.8 against a preliminary reading of 47. 

However, despite the improvement, the survey still paints a gloomy picture of the UK’s manufacturing sector, which is also slashing jobs at a rate not seen in over a decade. 

Analysts warn the situation is only likely to get worse through April as demand continues to contract both at home and abroad due to the coronavirus crisis.