- Pound (GBP) looks to manufacturing PMI
- BoE in focus later in the week
- Euro (EUR) starts the week lower
- Eurozone & German manufacturing PMIs
The Pound Euro (GBP/EUR) exchange rate is edging higher at the start of the week. The pair gained 0.3% across the previous week, closing on Friday at €1.1709, marking its second straight week of gains. At 05:45 UTC, GBP/EUR trades +0.4% at €1.1712.
The Pound surged to a two-month high of €1.1769 last week amid upbeat Brexit, Covid and economic data.
UK Covid cases fell across the start of the previous week supporting the view that the peak of this most recent wave may well have passed, lifting the Pound. The Pound was further supported by news that the UK will ease international travel restrictions. Prime Minister Boris Johnson announced plans to scrap quarantine for fully vaccinated EU & US arrivals in a move which it is hoped will boost the tourism industry.
However, a slight rise in cases towards the weekend in addition to a lack of economic data mean the Pound drifted lower off the weekly high.
Today UK manufacturing PMI data will be in focus. Analysts are expecting a confirmation of 60.4 in July, down from 63.9 in June. This will mark a steady deceleration in activity growth from May’s record 65.9.
Looking ahead the main focus this week will be on the Bank of England interest rate decision on Thursday. The central bank is not expected to adjust policy but could sound fairly upbeat regarding the outlook for the economy.
The Euro struggled last week amid a mixed bag of data. German business optimism unexpectedly missed forecasts. Consumer confidence in France and Germany also came in below expectations adding pressure to the common currency.
Meanwhile, the Euro picked up in the later part of last week as economic sentiment rose in the bloc for the sixth straight month hitting a record high. German inflation and unemployment were both better than forecast.
News that the EU had reached its vaccine target of 70% of all adults in region having at least one jab boosted demand for the common currency.
Today attention will turn to the Eurozone manufacturing PMI which analysts expect to be 62.6, down from 63.4. German and Eurozone retail sales could weigh on the Euro early on in the week.