- Pound (GBP) rebound from weaker manufacturing PMI inspired losses
- BoE’s Andrew Bailey warning dragged on Pound
- Euro (EUR) rebounded on Thursday despite mixed data
- US Non-farm payroll in focus
The Pound Euro (GBP/EUR) exchange rate is. The pair settled -0.38% lower on Thursday at €1.1616 towards the low of the day. At 05:45 UTC, GBP/EUR trades +0.11% at €1.1628. The pair is set to end the week flat and ended the month of June -0.3% after two straight months of gains.
The Pound came under pressure in the previous session after weaker than expected manufacturing PMI and after Bank of England Governor Andrew Bailey warned that the UK economy hadn’t fully recovered and that the current spike in inflation is likely temporary. Andrew Bailey sees bottlenecks in the supply chain, in addition to covid distortions as causing the rise in inflation.
Andrew Bailey’s comments come the day after out going chief economist Andy Haldane warned that he saw inflation rising as high as 4% by the end of the year and didn’t consider that it was so temporary.
The UK manufacturing PMI added to the downbeat tone surrounding the Pound. The manufacturing PMI was downwardly revised to 60.6 in June. Whilst this is still an elevated level, it was short of expectations of 61.0 recorded in the first estimate.
Looking ahead, there is no high impacting UK data due to be released today, leaving sentiment.
The Euro rebounded on Thursday despite a mixed bag of data. On the one hand, German retail sales were significantly softer than forecast, declining -2.4% year on year in May, down from a 4.4% increase in April and missing forecasts of 10.1% year on year rise.
On the other hand, the manufacturing sector expanded at a faster pace than initially expected. The PMI recorded 63.4, ahead of the 63.1 forecast.
Today all eyes will be on the US non-farm payroll. This is the most closely watched macro-economic data release and often moves the US Dollar. The Euro trades inversely to the US Dollar so the data release could impact the Euro as well.