- Pound (GBP) surges as covid restrictions set to be axed in two weeks
- UK services PMI slips by less than expected
- Euro (EUR) slipped despite surging business activity
- ZEW Economic sentiment data & ECB extraordinary meeting
The Pound Euro (GBP/EUR) exchange rate is advancing for the fourth straight session. The pair gained 0.02% on Monday settling at €1.1670 towards the upper end of the daily traded range. At 05:45 UTC, GBP/EUR trades +0.16% at €1.1688.
The Pound extended gains at the start of the week after Prime Minister Boris Johnson set out plans to end Britain’s covid restrictions in two weeks’ time. Boris Johnson confirmed that the government intends to end restrictive measures on 19th July, although a final decision will be taken next week. The step is expected to end the working from home instruction, remove formal limits on social contact and the mandate to wear a face mask.
Adding to the upbeat mood surrounding the Pound, data revealed that the post lockdown bounce back for service business eased by less than expected in June. The closely watch IHSMarkit/CIPS PMI for the services sector edged down to 62.4 in June from 62.9 in May. This was ahead of the initial June reading of 61.7 and bodes well for economic activity in the second quarter. The first GDP reading for Q2 in due on Friday.
The data comes after the UK economy slumped almost 10% in 2020 amid the hit from the pandemic.
The Euro traded in a more depressed fashion on Monday, despite upbeat data showing that the economic recovery was picking up firmly. The latest PMI data showed that business activity grew at the fastest pace in 15 years in June as covid restrictions were lifted. The Composite PMI, which ois considered a good gauge for business activity rose to 59.5, up from 57.1 in May.
The good news didn’t stop there. The Eurozone sentiment index also strengthened for a fifth straight month in July to 29.8, up from 28.1 in June.
Economic data will remain in focus today with the release of German factory orders sand ZEW economic sentiment data. Additionally, the ECB are expected to kick of the extraordinary meeting.