The Pound Sterling to Euro (GBP/EUR) exchange rate remained in a tight range on Monday as the common currency rebounded from its broad selloff earlier in the session as Greek negotiations continued to weigh. Meanwhile, the Pound Sterling to US Dollar (GBP/USD) exchange rate registered losses after the UK manufacturing sector failed to perform as well as economists had forecast.
UK Manufacturing Sector Fails to Grow in Line with Forecasts, Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar (GBP/USD) Exchange Rates Weaken
The UK Markit Manufacturing Purchasing Managers Index (PMI) rose from 51.8 to 52.0 in May, but failed to reach the 52.5 economists had forecast.
The Markit manufacturing report read: ‘The UK manufacturing sector saw further modest expansions of both output and new orders in May, as a solid domestic market continues to offset lacklustre demand from overseas. The consumer goods sector remained the stand-out performer, while investment goods producers fared better than in April. Negative news came from the goods sector, where the downturn in output continued.’
Euro to Pound Sterling (EUR/GBP), Euro to US Dollar (EUR/USD) Exchange Rates Forecast for Choppy Trading amid Greek Negotiations
Meanwhile, the Euro suffered heavy losses earlier in the session as the situation in Greece looked even more uncertain. Greek Prime Minister Alexis Tsipras criticised Eurogroup chiefs, saying that their ‘absurd proposals’ would push him to instigate a political and strategic crisis. It’s a strange development considering that the Greek government has remained so upbeat in recent months, despite a lack of progress being made in negotiations.
One source with close access to policymakers stated: ‘It is a lie that there is any optimism. There is no optimism. What the so-called optimism is about is stopping panic-stricken Greeks withdrawing deposits from banks. Time is not operating in the interests of the Greeks, but the EU. The showdown is fast approaching and nothing can be ruled out. Very soon we may see staged capital controls.’
US Dollar to Pound Sterling (USD/GBP), US Dollar to Euro (USD/EUR) Exchange Rates Forecast to Climb on Upbeat Non-Farm Payrolls and Fed Rate Hike Bets
Meanwhile, the US Dollar was awaiting the highly influential ISM Manufacturing stat. The index is expected to rise from 51.5 to 52.0 in May. However, the most influential US ecostats due out this week will come in the form of Friday’s Change in Non-Farm Payrolls and Unemployment Change data. An upbeat labour market result is likely to increase optimism that the US Federal Reserve will hike interest rates this year and cause a US Dollar (USD) rally.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is trading at 1.5177 while the Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3929.