- Pound (GBP) extends gains on reopening optimism
- Services PMI data in focus
- Euro (EUR) slips after weak German retail sales
- Eurozone services & composite PMIs up next
The Pound Euro (GBP/EUR) exchange rate is edging higher for a second straight session. The pair settled +0.17% higher on Wednesday at €1.1601 after 3 straight days of declines. At 05:45 UTC, GBP/EUR trades +0.05% at €1.1606.
UK data was mixed on Wednesday. British mortgage applications approvals rose 869,000 beating forecasts and boding well for the housing market boom. However, consumer credit for April was much worse than anticipated printing at -£0.377 billion.
The Pound brushed off the weaker data, instead focusing on comments by British Prime Minister Boris Johnson that he remains optimistic that the UK will continue to along the re-opening path with the final lockdown restrictions being eased on 21st June. Concerns have been stalking the market that this date could be pushed back given the recent surge in covid cases. However, even as cases are rising at a rapid rate, the death toll remains low.
Today all eyes will be on the service sector PMI release for May. This is the final reading so may not be as market moving as the initial estimate. Analysts are expecting the PMI to rise to 61.8, whereby the number 50 separates expansion from contraction. This would confirm that the sector roared ahead as lockdown restrictions eased.
The Euro slipped lower on Wednesday after a mixed bag of data and on a stronger US Dollar. German retail sales fell by more than expected in April suggesting that the consumer rebound was struggling to get off the ground.
German retail sales dived -5.5% month on month in April, down from a 7.7% increase in March and well below the -2% fall forecast. On an annual basis, retail sales grew 4.4%, down from 11% in March and below the 10.1% rise expected.
Attention will now turn to the Eurozone services and composite PMI for May. The data is expected to confirm that activity in the services sector rebounded firmly from 50.5 in April to 55.1 in May. A strong reading could help to lift the Euro.