gbp-british-pound-coins - GBP
  • Pound (GBP) shrugged off upbeat PMI data
  • Brexit concerns linger
  • Euro (EUR) boosted by better than forecast data including impressive retail sales
  • Germany factory orders & ECB President Christine Lagarde up next

The Pound Euro (GBP/EUR) exchange rate is attempting to claw higher. The pair settled lower in the previous session, down -0.2% at €1.1011 close to the low of the day. At 05:15 UTC GBP/EUR trades 0.05% at €1.1017.

The Pound moved lower in the previous session shrugging off data which showed that the recovery in the service sector continued as business activity expanded. The IHS Markit services PMI grew for a third consecutive month in September recording 56.1, higher than the flash estimate of 55.1.

However, this was still the slowest pace of expansion in the sector since June after reaching a 5 year high in August of 58.8. That said it was still a very resilient reading given a tightening of lockdown restrictions and the end of the government’s Eat Out to Help Out scheme.

The data comes ahead of Friday’s GDP reading which is expected to show that the U.K. economy rebounded strongly and output in August was just 7% below its level a year ago.

Brexit uncertainty continues to linger. Whilst there is growing optimism that a trade deal will be reached between the U.K. and the EU. However, the lack of details surrounding this week’s talks is unnerving investors.

The Euro is traded on the front foot in the previous session, supported by better than expected data. Whilst the service PMI showed that activity in the service sector contracted, it did so at a slower rate than initially forecast, recording 48 on the index, whereby 50 separates expansion from contraction.

Eurozone retail sales were also impressive, jumping a solid 4.4% month on month in August, up from -1.3% decline in July. Increased spending due to pent up demand and higher savings resulted in some excellent August figures which are unlikely to be replicated in the coming months.

Attention will now turn to German factory orders and speech by European Central Bank President Christine Lagarde