The British pound is modestly higher against the euro on Friday.
- UK Treasury plans a new infrastructure Bank
- Eurozone Composite July flash PMIs back into expansion
- Pound snaps a 3-day losing streak
- Exchange rate to finish the week flat
GBP/EUR was lower by 16 pips (+0.14%) to 1.1000 as of 3pm GMT. This week the pound-euro exchange rate is little changed at -0.02%.
The currency pair chopped around in a 40 pip range underneath 1.10 for most of the day. Yesterday it had fallen -0.16%.
GBP: New UK investment bank to be created
Sterling snapped a three-day losing streak and is on course to end the week flat against the euro.
Brexit concerns appeared to weigh on the pound but the bigger theme across the week was that of US dollar weakness. The soft dollar propelled EUR/USD above 1.16 and the GBP/USD above 1.27 to the highest levels since March, as well as gold over $1900 per oz and close to a fresh record high.
The economic data was well-received on both sides of the English Channel so it was the creation of a new UK infrastructure bank that gave the pound a small edge. The new bank would serve to replace the European Investment Bank after Brexit and help push forward Prime Minister Boris Johnson’s “Level Up” agenda. It would likely be formally announced in the August Statement by Chancellor Rishi Sunak according to the FT.
EUR: Eurozone economic activity picks up in July
The services and manufacturing sectors across the Euro-area improved at a much greater speed than anticipated in July. The service sector reading was the highest in over 2-years and the manufacturing the best in 18-months. The Eurozone July flash services PMI rose to 55.1 when a smaller rise to 51.1 was expected. The flash manufacturing PMI reading came in at 51.1 versus the 501.1 expected.
Commenting on its own survey data Markit noted: “The data add to signs that the economy should see a strong rebound after the unprecedented collapse in the second quarter. However, while the survey’s output measures hint at an initial v-shaped recovery, other indicators such as backlogs of work and employment warn of downside risks to the outlook.”