- Pound (GBP) rises after services PMI grows
- The outlook is still gloomy
- Euro (EUR) slips as recession fears persist
- Business activity contracted again in August
The Pound Euro (GBP/EUR) exchange rate is rising for a third straight day. The pair rose 0.33%, settling on Tuesday at €1.1870, after trading in a range between €1.1830 – €1.1882. At 08:45 UTC, GBP/EUR trades +0.03% at €1.1873.
The pound pushed higher yesterday after PMI data was a mixed bag. Britain’s private sector business activity slowed in August but managed to book at least some growth. The dominant service sector performed better than expected at the same pace as in July, the manufacturing component tumbled to 46 in August down from 52.1 in July. This marked the lowest level since May 2020 which was the depths of the pandemic.
The composite PMI came in at 50.9, down from 52.1 in July and its lowest level since February 2021. Expectations had been for a less steep fall to 51.1.
Today there is no high impacting UK data, which means sentiment is likely to drive the currency.
The euro came under pressure again yesterday after PMI data showed that business activity contracted again in August. Consumers rein in spending amid the deepening cost of living crisis, hitting the service sector. Meanwhile, supply chain disruption continues to impact manufacturers.
The data shows that the Eurozone economy is increasingly likely to fall into a recession in the coming months amid the fallout from the Russian war and COVID lockdowns in China.
The composite PMI fell to 49.2, down from 49.9 in July. The level 50 separates expansion from contraction.
Separately Eurozone consumer confidence rose up from its record low hit in July. The European Commission reported consumer confidence at -24.9 in August, up from -27. However, worries over rising costs and the slowing economy remain.
Today the euro remains under pressure as recession fears persist following a warning from top economists over the effects of the Russian war hurting the German economy for years.
There is no high impacting eurozone data due today leaving sentiment to drive data.