- Pound (GBP) rises ahead of PMI data
- New Northern Ireland protocol terms sooner rather than later?
- Euro (EUR) falls ahead of PMI data
- Eurozone composite PMI is expected grow at a faster pace
The Pound Euro (GBP/EUR) exchange rate is rising for a third straight day. The pair rose 0.14% at the start of the week settling on Monday at €1.1270, after trading in a range between €1.1246 – €1.1274. At 05:45 UTC, GBP/EUR trades +0.02% at €1.1272.
The pound drifted higher in the previous session amid lack of clear fundamental drivers. With no high impacting UK economic data, the focus was on Brexit optimism and hopes that new terms for the Northern Ireland protocol could be agreed upon sooner rather than later.
Today attention turns back to the economic calendar amid the release of UK business activity data as measured by the purchasing manager’s index. Expectations of the composite PMI, which is considered a good gauge for business activity, to rise back over 50, the key level which separates expansion and contraction.
The services sector, which is the dominant economic sector in the UK, is expected to remain in contraction in February at 49.2 after falling to 48.7 in January, its lowest level since January 2021 when Britain was under its tough Covid lockdown.
The data is expected to highlight the risk of the UK economy falling into recession in the coming month’s amateur labour shortages, high-interest rates industrial action.
The euro edged lower on Monday despite improving consumer morale, while also giving up some gains from last week after hawkish ECB commentary boosted the common currency.
Eurozone consumer confidence improved in February to -19 up from -20.9 as energy prices and inflation fall and as recession risks recede. However, morale remains well below its long term average.
Attention will now be on the PMI data, which is expected to show that business activity in the eurozone improved again in February. The composite PMI is forecast to rise to 50.6, up from 50.3 in January.