The pound trended lower in the previous session versus the euro. The pound euro exchange rate dropped to a low of €1.1663 before closing the session down 0.3% at €1.1683.
The pound slipped lower versus the common on Monday as investors digested a narrowing of the Conservative lead in the polls and as manufacturing data showed that the sector remains in the doldrums.
The monthly snapshot if the UK manufacturing sector showed that the headline PMI slipped to 48.9 in November down from 49.6 in October. The level 50 separates expansion from contraction. The UK manufacturing sector has been in contraction for seven straight months. Employment in the sector declined for an eighth straight month and the pace of job losses increased to the quickest rate since September 2012 as manufacturers sought to reduce their costs.
The weak data shows that that UK manufacturing sector was caught up in further Brexit uncertainty amid another extension to Article 50, combined with growing paralysis ahead of the upcoming general election. The pound dipped lower following the release.
Today investors will continue to watch the polls. Any signs of the Conservatives giving up its strong lead could weight on the pound. Investors will also turn their attention towards UK construction figures. Investors will be keen to see whether the sector remains deeply I contraction. A weak rearing could see the pound under pressure.
EZ Producer Price Index & Trade Developments
The euro charged higher in the previous session on a combination of better than forecast manufacturing figures. The euro also received support from the decline in the dollar, to which it trades inversely.
Data showed that the eurozone manufacturing sector contracted for a 10th straight month in November, recording 46.9. This was above October 45.9 and higher than estimates of 46.6, although it was still below the 50 mark which separates contraction from expansion. Delving deeper into the figures there were some encouraging signs. Forward looking indicators suggest that the eurozone’s battered factories could be turning a corner.
Today there is mid-tier data in the form of producer price index, which measures inflation at wholesale level, could attract some attention. Analysts are expecting ppi to have declined -1.9 year on year, down from 1.2%. This could drag on the euro. Trade will also be in focus as President Trump threatens tariffs on European imports in retaliation of illegal Airbus subsidiary.
|What do these figures mean?|
|When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.
For example, it could be written:
1 GBP = 1.13990 EUR
Here, £1 is equivalent to approximately €1.14. This specifically measures the pound’s worth against the euro. If the euro amount increases in this pairing, it’s positive for the pound.
Or, if you were looking at it the other way around:
1 EUR = 0.87271 GBP
In this example, €1 is equivalent to approximately £0.87. This measures the euro’s worth versus the British pound. If the sterling number gets larger, it’s good news for the euro.