- Pound (GBP) eases from fresh 20 month high
- UK PMI data to show mild slow down in activity
- Euro (EUR) steadies after COVID inspired fall
- Eurozone PMI s due
The Pound Euro (GBP/EUR) exchange rate is moving a few points lower on Tuesday after a flat finish in the previous session. The pair settled just 0.01% lower on Monday at €1.1914 after rising to a fresh 20 month high of €1.1938 earlier in the session. At 05:45 UTC, GBP/EUR trades -0.04% at €1.1915.
The Pound was well matched versus the Euro in the previous session but came under pressure versus the strong USD. There was little on the economic calendar to drive sterling.
Sterling has been rising higher on expectations that the Bank of England could raise interest rates as soon as December. However, in an interview with BoE Governor Andrew Bailey over the week was much more balanced with Andrew Bailey saying that inflation could stay elevated for longer but there is also a chance it won’t prove as persistent as feared.
Looking ahead UK business activity data will be in focus. Expectations are for a mild slowdown in activity in November to 57.5 from 57.8.
The Euro came under pressure on Monday owing to a combination of a stronger US Dollar as Fed Chair Powell was re-nominated and amid deteriorating consumer sentiment. According to the European Commission eurozone consumer confidence fell by 2.00 points to -6.8 in November, down from -4.8 in October. This was worse than the -5.5 that analysts were expecting.
The data comes as inflation and covid cases continue to rise. Yesterday Austria entered into its fourth lockdown whilst COVID cases across the bloc are rising sharply. Germany and the Netherlands are also facing tougher COVID restrictions as numbers keep on climbing.
Looking ahead Eurozone business activity data will be in focus. The composite PMI is expected to slip lower to 57.3 in November, down from 58.3 in October. Activity in both the manufacturing and services sector are expected to nudge lower but remain firmly in expansion territory which is above 50.
Germany will be particularly in focus as the business activity composite PMI is expected to decline to 51, just about remaining in expansion.
