- Pound (GBP) falls back from data inspired highs
- UK service sector expected to grow in February
- Euro (EUR) rises as Russia war fears ease
- Eurozone composite PMI due
The Pound Euro (GBP/EUR) exchange rate is edging lower at the start of the week. The pair gained 0.47% across the previous week, settling at €1.2000, around the high of the week. At 05:45 UTC, GBP/EUR trades -0.15% at €1.1983.
The Pound pushed higher last week for the second consecutive week after a run of upbeat UK data. The jobs market is still recovering well, vacancies are at a record high, inflation ticked higher to 5.5% 3-decade high and retail sales smashed analyst’s forecasts.
Retail sales rose 1.9% month on month in January, as Omicron fears eased, and consumers shrugged off rising inflation.
The data released last week could encourage the Monetary policy committee at the Bank of England consider raising interest rates again very soon, possibly next month.
UK business activity figures, as measured by the purchasing managers index will be release today. The UK manufacturing sector is expected to see activity remain strong in February at 57.2, just down 0.1 from January’s 57.3.
Meanwhile, activity in the service sector is expected to rise in February to 55.5, up from 54.1 in January. The recovery is expected as the work from home covid restriction was eased as Omicron cases fell.
The Euro came under pressure as fears grew that Russia would invade Ukraine. Mixed headlines saw investors jump from risk on to risk off across the week. However, by the end of the week it was apparent that Russia had built more troops at the Ukraine border, despite saying that it was pulling troops back.
Over the weekend, Putin and US President Biden agreed to meet, easing fears of war and boosting the euro.
In addition to geopolitical fears investors will be watching the latest PMI data from the bloc. Expectations are for business activity to increase in February, with the composite PMI rising to 52.7, from 52.3.
