Pound Euro (GBP/EUR) Exchange Rate Muted as Eurozone Inflation Hits 13-Month Low
The Pound Sterling Euro (GBP/EUR) exchange rate remained flat, and the pairing is currently trading at an inter-bank rate of €1.1264.
In a flash estimate from the statistical office of the European Union, Eurozone annual inflation is expected to be 1.2% in May.
The Eurozone’s Flash Consumer Price Index (CPI) rose by 1.2%, the smallest increase since April 2018.
Annual core inflation edged up by 0.8%, hitting a two-month low.
This left the single currency dampened as inflation edged further away from the European Central Bank’s (ECB) inflation target.
Euro (EUR) Flat as Eurozone Unemployment Falls to Decade Low
However, unemployment within the Euro area fell to 7.6% in April from 7.7% in March.
This was the lowest unemployment rate recorded since August 2008.
Meanwhile, unemployment within the EU28 remained stable at 6.4%.
This was the lowest rate recorded since the data was recorded in 2000.
Hiowever, better than expected unemployment data could do little to offset the Eurozone’s disappointing inflation data.
Sterling (GBP) Muted as ‘Fragile Dreariness’ Hits UK Construction Sector
On Tuesday morning data revealed that the UK Markit construction PMI slipped to a lower-than-forecast 48.6 from April’s 50.5.
May’s slump was the lowest since March 2018.
Meanwhile, the survey revealed that clients opted to hold back on their major spending decisions due to Brexit uncertainty and concerns about the economic outlook.
Commenting on the data, Group Director at the Chartered Institute of Procurement and Supply, Duncan Brock said:
‘A fragile dreariness descended on the sector this month with lower workloads leading to the fastest decline in purchasing of construction materials since September 2017. With continuing uncertainty around Brexit and instabilities in the UK economy, client indecision affected new orders which fell at their fastest since March 2018 and particularly affected commercial activity.
‘The biggest shock however, came in the form of job creation as hesitancy to hire resulted in the largest drop in employment for six and a half years. Not much to be happy about it seem though an easing in some input costs for raw materials offered some relief while energy and fuel prices continued to rise.’
Pound Euro Outlook: Will Better-than-Expected Retail Sales Buoy EUR?
Looking ahead to Wednesday, the Pound (GBP) could rise against the Euro (EUR) following the release of the UK services PMI.
If data shows the UK services sector grew at a faster rate than forecast in May, Sterling could be buoyed.
Meanwhile, the single currency could rise following the release of the Eurozone’s retail sales data.
If sales rise higher than expected during April, could buoy the Euro and cause the Pound Euro (GBP/EUR) exchange rate to slide.