GBP/EUR: Pound Heads Higher As EU To Mull Over Brexit Extension
  • Pound (GBP) steady after a slight mission manufacturing pmi data, even so the UK’s economic recovery is on track
  • UK coronavirus cases surge to highest since June
  • Euro (EUR) remains upbeat as manufacturing pmi data across the board, beats forecasts
  • Producer price figures in focus as attention remains almost fully on economic calendar

The Pound Euro (GBP/EUR) exchange rate is holding steady. The pair settled on Monday -0.1% lower at €1.1115 after having reached a two-week high of €1.1137 on Friday. At 05:15 UTC, GBP/EUR trades -0.05% at €1.1111.

The Pound slipped in the previous session following slightly disappointing manufacturing PMI data. The latest manufacturing statistics from IHS/Markit showed that the UK economic recovery remains on course. The manufacturing pmi rose to a 16-month high of 53.3 in July, up from 50.1 in June. The level 50 separates expansion from contraction. Although this was slight short of expectations of 53.6.

The improving data comes as lockdown restrictions have been loosened, allowing manufacturers to restart production. Even so IHS warned that it would take several months to fully recoup the output lost since the start of the coronavirus crisis.

Today there is no high impacting data. Investors will continue to mull over covid headlines amid concerns of a rising number of infections in parts of Manchester, Lancaster and Yorkshire. The UK saw 938 new covid cases yesterday – the highest since June.

Wednesday sees the release of service sector activity data. This will be closely watched because the it is the dominant sector in the UL economy. A solid recovery in this sector would be well received by Pound investors, especially ahead of the BoE monetary policy meeting on Thursday.

The Euro settled higher after beating manufacturing forecasts across the board. Spain, German and the Eurozone as a whole surprised to the upside, indicating that he economic recovery in the region was solid.

It might only be early on in the week but attention has returned to the economic calendar with less focus on coronavirus statistics.

Today the producer price index, which measures inflation at wholesale level will be in focus. Analyst expect inflation to increase 0.5% month on month in June, after a -0.6% decline previously. An uptick in wholesale level inflation could lead to an uptick in consumer prices which is Euro positive.