- Pound (GBP) rose after upbeat services PMI data
- Prices rose at the fastest rate since records started
- Euro (EUR) trades lower despite strong composite PMI data
- Eurozone retail sales up next
The Pound Euro (GBP/EUR) exchange rate is edging higher on Friday for a third straight session. The pair settled up +0.25% higher on Thursday at €1.1629 after trading as high as €1.1645 earlier in the session. At 05:45 UTC, GBP/EUR trades +0.05% at €1.1635. The pair is set to end the week at roughly the same level that it started the week.
The Pound advanced following better than forecast services PMI data. The data revealed that activity in the services sector expanded at the fastest rate in 24 years as pubs, restaurants and bars were allowed to resume inside trade. The index jumped to 62.9 in May, up from 61 in April and ahead of the preliminary reading of 62.
The data points to the UK enjoying a rapid rebound as the pandemic restrictions eased.
The data comes after the OECD upwardly revised the UK’s GDP outlook for this year to 7.3%, up from 5.7% projected in March.
Despite the strong growth the Bank of England have given few clues as to what or when the next move will be. Inflation is on the rise at least in the short term. The PMI data also showed the biggest jump in prices since the survey began in 1996 as staffing costs, transportation bills and raw materials all started to rise.
The Euro fell on Thursday owing to a stronger US Dollar and despite encouraging business activity data in the region. The Eurozone composite PMI which is broadly considered a good gauge of business activity surged in May as lockdown restrictions started to be lifted. The dominant service sector picked up, mirroring similarly strong data from the manufacturing sector on Tuesday. Manufacturing PMI hit a record high in May.
Today, attention will remain on the Eurozone economic calendar with retail sales from the region set to be released. Expectations are for a -1.2% month on month contraction in sales after a 2.7% jump in sales in March.