GBP/EUR: Will UK Service Sector PMI Drag Pound Lower?

The pound snapped a four-session losing streak versus the euro on Monday, the pound euro exchange rate rallied 0.4% to close at €1.1765. The pound is climbing higher versus the euro as trading kicks off on Tuesday.

Stronger than forecast U.K. service sector data helped boost sentiment towards the pound. Activity in the service sector improved at the end of 2019 after a decisive general election result and some Brexit clarity which boosted business optimism. The IHS Markit/ CIPS service sector pmi ticked higher to 50 in December, up from 49.3 in November. The figure 50 separates expansion from contraction.

Increasing new orders combined with a recovery in business confidence supported a lift in employment levels across the sector, the fastest rise in employment for five months. Given that the pmi’s are considered a measure of health for the economy, and the service sector accounts for 80% of economic activity the outlook for the UK economy appears to be improving. As a result, the pound rallied.

Today there is no high impacting U.K. economic data due to be released. The pound could come under pressure if investors turn their attention back to Brexit and the transition period. Boris Johnson is due to meet with European Commission President Ursula Von Der Leyen on Wednesday. Investor will be watching keenly for any further clues over the negotiating period.

Euro Supported After A Slew Of Beats, More Data To Come

The euro traded broadly higher on Monday, albeit not as high as the pound, as investors cheered a slew of strong data. German retail sales smashed analysts’ expectations jumping 2.1% month on month in November, well ahead of October’s -1.6%. German composite pmi reading printed growth rather than the contraction as expected. Looking at the Eurozone as a whole, the pmi beat expectations with the service sector at 52.8 whilst the composite figure which gives a good idea of the health of the economy as a whole printed at 50.9. Whilst the data was better than forecast is wasn’t sufficient good to change the outlook for the Eurozone.

This week euro investors have plenty of data to digest. Today investors will remain focused on the Eurozone economic calendar with Eurozone retail sales, inflation, confidence data and German factory orders expected to drive movement in the euro.


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. is a news site only and not a currency trading platform. is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.