GBP/EUR Exchange Rate Slides, Concerns Rise Over Q2 Growth as UK Manufacturing Activity Slips Again
The Pound Euro (GBP/EUR) exchange rate tumbled this morning as markets reacted to the UK’s latest Manufacturing PMI figures.
At the time of writing GBP/EUR exchange rate is down around 0.2%, with the pairing’s losses nearing around half a cent.
Pound (GBP) Exchange Rate Slumps as Q2 Gets Off to a Poor Start
The Pound (GBP) exchange rate weakened again this morning as UK factory activity was shown to have fallen faster than expected last month.
According to data published by IHS Markit, the UK’s Manufacturing PMI slumped from 55.1 to 53.9 in April, falling below expectations of a more modest decline to 54.8 and striking a 17-month low.
The slowdown in activity was largely attributed to easing demand from overseas, which led to more subdued expansion in factory output, new orders and employment.
Following on from some disappointing growth figures in the first quarter, today’s figures have not inspired hopes that the UK economy may have rebounded in the second quarter.
Rob Dobson, Director at IHS Markit said;
‘The start of the second quarter saw the UK manufacturing sector lose further steam… On this footing, the sector is unlikely to see any improvement on the near-stagnant performance signalled by the opening quarter’s GDP numbers.’
Euro (EUR) Exchange Rate Slowed by ECB Doubts
Meanwhile the advance of the Euro exchange rate was slowed this morning as the single currency comes under pressure over the receding prospects of the European Central Bank (ECB) tightening monetary policy anytime in the near future.
These renewed doubts come in the wake of some weaker-than-expected inflation figures from Germany in April.
Analysts suggest this stubbornly low rate of inflation as well as hints that the Eurozone economy may have peaked is likely to see the ECB hold steady for some time to come.
GBP/EUR Exchange Rate Forecast: Will Slide in GDP Weaken the Euro?
Looking ahead the GBP/EUR exchange rate may tick higher on Wednesday following the release of the Eurozone’s latest GDP figures.
There has been considerable discussion regarding the Eurozone’s slower start to 2018 something which is likely to be confirmed by tomorrow’s data, with economists forecasting that growth will have slowed from 0.6% to 0.4% in the first quarter.
However the Pound may struggle to take advantage of any weakness in the Euro exchange rate over the coming days as the UK publishes the rest of April’s PMI figures, with lacklustre growth in either the construction of service sector likely to cap Sterling’s gains.
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