The Pound Euro (GBP/EUR) exchange rate has risen this morning following the UK’s latest PMI data increasing more than expected.
At the time of writing the GBP/EUR pairing are currently trading around the 1.1631 level as the Eurozone limits its losses on the bloc’s PMI data for May.
Pound (GBP) Supported by Latest UK PMI Data
The Pound has seen itself rising against many of its major rivals this morning following the release of the latest PMI’s from the UK for May.
The IHS Markit Services PMI from the UK rose to 62.9 points during May, the fastest rate of output growth for almost a quarter of a decade.
Tim Moore, Economics Director at IHS Markit, which compiles the survey commented on the latest PMI’s saying:
‘UK service providers reported the strongest rise in activity for nearly a quarter-century during May as the roll back of pandemic restrictions unleashed pent up business and consumer spending.’
‘The latest survey results set the scene for an eye-popping rate of UK GDP growth in the second quarter of 2021, led by the reopening of customer-facing parts of the economy after winter lockdowns.’
However, investors remain cautious surrounding Sterling as the Indian variant of the coronavirus is now dominant in 20% of the UK, as concerns still remain over whether the variant could derail the UK’s roadmap out of lockdown.
Euro (EUR) Limits Losses on Eurozone PMI’s
The Euro has weakened today as a strengthening US Dollar limits the appeal of the single currency this morning.
However, capping the Euro’s losses are the latest PMI’s from the Eurozone which have shown the bloc recorded its strongest services growth in three years.
Chris Williamson, Chief Business Economist at IHS Markit commented on the latest growth in the services sector:
‘The Eurozone’s vast service sector sprang back into life in May, commencing a solid recovery that looks likely to be sustained throughout the summer. Businesses reported the strongest surge in demand since the start of 2018 as Covid restrictions were eased and vaccine progress boosted confidence.’
‘The service sector revival accompanies a booming manufacturing sector, meaning GDP should rise strongly in the second quarter. With a survey record build-up of work-in-hand to be followed by the further loosening of Covid restrictions in the coming months, growth is likely to be even more impressive in the third quarter.’
Pound Euro Exchange Rate Outlook: Construction PMI’s in Focus
Tomorrow will see the release of the latest construction PMI from both the UK and Eurozone which could drive movement in the GBP/EUR pairing.
More so, the most recent retail sales from the Eurozone for April are forecast to show that year-on-year sales increased to 21% as much of the bloc left the strictest of lockdown restrictions.
The GBP/EUR pairing will continue to be driven by any further coronavirus developments over the weekend with Sterling investors keeping an eye on the Indian variant of the virus.