- Pound (GBP) extends gains
- Services PMI to show a slow down in August versus July
- Euro (EUR) failed to rise despite surging PPI inflation
- Eurozone services PMI in focus
The Pound Euro (GBP/EUR) exchange rate is rising higher on Friday for a second straight session. The pair settled +0.14% higher in the previous session at €1.1644. At 05:45 UTC, GBP/EUR trades +0.03% at €1.1648. The pair is set to book mild losses in the region of -0.1% across the week.
The Pound pushed higher in the previous session despite a shortage of fresh data, and ongoing Brexit woes.
This week as a whole has been a quiet week as far as the UK economic calendar is concerned with few releases for investors to sink their teeth into. Earlier in the week the manufacturing PMI was released. There have been no more high impacting releases since.
Today that changes, and investors will be looking to wards the services PMI final reading for August keenly. Expectations are for the services sector to expand by 55.5 last month down from 59.6 in July. A downward revision amid rising covid cases could unnerve investors.
The Euro slipped lower in the previous session despite surging inflation in the Eurozone and increasingly hawkish calls from the European Central Bank.
Eurozone inflation at wholesale level, as measured by the producer price index came in at 2.3% month on month in July, up from 1.4% in June and well above forecasts of 1.1%. On an annual basis PPI surged to 12.1%, up from 10.2%.
The PPI is often considered a lead indicator for consumer prices. Elevated wholesale inflation often passes forward to lift inflation at consumer level (CPI). Currently CPI in the Eurozone is 3% jumping from 2.2% and well above the ECB target of 2%.
Policy makers in the ECB are starting to lean towards a more hawkish bias and tapering bond purchases.
Today the focus is back on the economic calendar with the release of the final services PMI, which is expected to slip to 59.5 in August, down from 60.2