Pound Euro (GBP/EUR) Exchange Rate Trades Narrowly amid Risk-On Market Mood
The Pound Euro (GBP/EUR) exchange rate is trending sideways today. A risk-on impulse is likely limiting gains for the pair. Poor PMI figures for both the UK and Eurozone could also be keeping GBP/EUR trading in a limited range today.
At time of writing the GBP/EUR exchange rate is at around €1.1844, virtually unchanged from this morning’s opening figures.
Pound (GBP) Subdued as Manufacturing Sector Slumps Unexpectedly
The Pound (GBP) is currently seeing limited bets despite a return of risk appetite in the markets. Sterling slipped against many of its rivals earlier today, hitting its lowest point against the US Dollar (USD) since March 2020.
A surprise downturn in August’s PMI figures is likely capping gains for GBP today. Growth in the UK’s manufacturing sector printed a surprise contraction in August. The PMI printed a fall of 46 versus forecast growth of 51.1.
Annabel Fiddes, economics associate director at S&P Global Market Intelligence said:
‘Waning customer demand amid the weaker economic outlook, and shortages of both staff and inputs, were reported to have hit goods producers hard, with firms registering the quickest drops in output and new work since May 2020.’
On the other hand, the UK’s services sector registered another consecutive month of growth which may help to limit losses for the currency. Increasing bets on interest rate hikes from the Bank of England (BoE) may also be lending support to Sterling today.
Euro (EUR) Slips as High Energy Prices Weigh on Eurozone
The Euro (EUR) is slipping against many of its rivals today, hitting its lowest point against the US Dollar (USD) in nearly two decades.
The single currency is likely suffering as a surge in natural gas prices increases fears of an imminent Eurozone recession. A risk-on impulse may also be pushing EUR lower.
Energy prices have continued to soar after last week’s surprise announcement from Russian supplier Gazprom that the Nord Stream 1 pipeline would be temporarily shut at the end of August.
The closure is expected to last for three days but is likely to place further strain on the Eurozone’s attempts to fill its winter fuel reserves.
Poor PMI figures released earlier today may also be pushing EUR lower. Private sector output across both Germany and the Eurozone continued to fall in August.