- Pound (GBP) rises despite weak PMI data
- The composite PMI fell to a 6-month low
- Euro (EUR) dropped as business activity contracted further
- German IFO business sentiment data is due
The Pound Euro (GBP/EUR) exchange rate is holding steady after strong gains yesterday. The pair rose +0.37% in the previous session, settling on Monday at €1.1596 and traded in a range between €1.1545 – €1.1604. At 05:35 UTC, GBP/EUR trades -0.02% at €1.1594.
The euro fell lower in the previous session after the latest eurozone business activity data suggested a worsening of economic conditions within the region. The eurozone PMI survey showed a progressively bleaker outlook, and the July composite PMI dropped to 48.9, indicating A deepening contraction than in June when it was 49.9. The level 50 separates expansion from contraction.
Delving deeper into numbers, the PMI figures showed that demand is falling for both goods and services in the eurozone as services new orders fell for the first time in seven months, and the decline in new orders for manufacturing also steepened further. The outlook for Germany was particularly bleak, with output PMI’s pointing to a deep contraction.
Attention will remain on Germany today with the release of the German Ifo business climate index which is expected to deteriorate further in July to 88, down from 88.4 in June.
The weak PMI data combined with a deteriorating business climate, particularly in Germany the eurozone’s largest economy raises questions over whether the ECB will need to raise interest rates much higher.
The pound rose against the euro but struggled against The US dollar after data shows that UK firms grew at the slowest pace in six months in July.
the composite PMI index showed a preliminary reading of 50.7, down from 52.8 in June, marking the biggest monthly decline in 11 months and the weakest reading since January. Analysts had expected a slowdown to 52.4.
The data reinforced A sluggish outlook UK economy, which has so far managed to avoid a recession in 2023 but rising interest rates the high cost of living’s starting to take their toll.
There is no high-impacting UK economic data due for release today.
