GBP/EUR: Pound Extend Gains Ahead of BoE’s Mark Carney Speech

The pound advanced versus the euro in the previous session as investors digested a raft of data and attempted to gauge which central banks would be next to follow in the footsteps of the Federal Reserve. The pound rallied 0.7% to close the session at €1.1558.

The pound is extending those gains in early trade on Thursday. At 06:50 UTC, pound versus euro is trading 0.1% higher at €1.1573.

GBP/EUR: Pound Rises Despite Softer Service Sector Data

Data on Wednesday revealed that U.K. service sector activity slowed in February as the coronavirus outbreak led to cancelled bookings and projects. The service sector PMI declined to 52.2, down from 52.9 in January. This was however the second-best month for the sector since September 2018 thanks to a rise in consumer confidence following the outright Conservative win in the December general election. The PMI data also revealed a notable slowdown in the bounce in the latter part of February as coronavirus concerns took hold.

There is no high impacting U.K. economic data due to be released today. Instead investors will look towards Bank of England Governor Mark Carney who is due to speak in London. Whilst the BoE Governor speaking would usually attract action, his speech will be even more in focus given that the Federal Reserve cut interest rates earlier in the week by a punchy 50 basis points. The Fed made the move to shore up the US economy and financial markets in the face of the coronavirus threat to the economy. The Bank of Canada made a similar move yesterday. Investors are starting to gauge which central bank could be next to ease policy.

Signs Of Coronavirus Impact On German Economy

The euro was on the back foot in the previous session following a mixed batch of data. Whilst German retail sales bounced back after a terrible December, activity in the German service sector was weaker than forecast.

German PMI data showed signs of trouble. The IHS Markit service sector PMI fell to 52.5 in February down from 54.2 in the previous month. This was the weakest reading since November, significantly weaker than the 53.5 estimate. The data revealed that the slowdown was caused by a stalling of new business, with a sharp decline in demand from abroad. This is a clear impact of coronavirus outbreak on foreign demand. China is Germany’s biggest trading partner.

Today there is no high impacting eurozone data for investors to focus on. Instead coronavirus headlines are expected to dominate as the number of cases in Italy grow rapidly.

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