- Pound (GBP) looks to services PMI data
- BoE’s Tenreyo to speak
- Euro (EUR) falls after inflation cools
- Eurozone composite PMI data due
The Pound Euro (GBP/EUR) exchange rate is edging lower on Tuesday after small gains in the previous session. The pair rose 0.15% settling on Monday, at €1.1612, after trading in a range between €1.1589 – €1.1635. At 05:45 UTC, GBP/EUR trades -0.06% at €1.1606.
The pound pushed higher in the previous session despite the dismal economic outlook for the UK. According to data from the British Chamber of Commerce, 54% of the companies’ surveyed expected turnover to rise over the coming 12 months, this was the lowest level since later 2020, when companies were being affected by COVID lockdowns.
Today attention is turning to the service sector PMI reading which is expected to show that the service sector PMI held steady in June at 53.4, whereby the level of 50 separates expansion from contraction. The service sector is the most dominant sector in the UK economy so any slowdown here could fuel fears of an economic slowdown in the UK.
The data comes after the manufacturing PMI for June fell by more than expected to a two-year low of 52.8 down from 54.6 in May.
In addition to data, attention will also be on Bank of England policy maker Silvana Tenryo who is due to speak and could shed more light on the direction of monetary policy.
The euro fell in the previous session after producer price inflation data fell by more than forecast and after investor sentiment tumbled.
PPI, which measures inflation at the factory gate level slipped to 36.3% year on year in May, down from 37.2% in April a record high. PPI is a lead indicator for consumer prices and raises optimism that consumer price inflation could ease slightly going forwards.
Sentix investor confidence came in much worse than expected falling to -26.4 in July, well below the -20 expected.
Looking ahead attention will be on the composite PMI which is expected to confirm a sharp decline in June to 51.9. down from 54.8 in May. The composite PMI is considered a good gauge for business activity.