- Pound (GBP) is rising for a third day
- UK services PMI contracted by less than expected
- Euro (EUR) fell after mixed data
- ECB speakers are in focus
The Pound Euro (GBP/EUR) exchange rate is rising for a third straight day. The pair rose +0.08% in the previous session, settling on Wednesday at €1.1543 and trading in a range between €1.1515 – €1.1576. At 06:35 UTC, GBP/EUR trades +0.1% at €1.1555.
The pound pushed higher in the previous session after data showed that the UK economy was not faring quite as badly as initially expected in September. The services PMI came in at 49.2 last month, down from 49.4 in August. The level 50 separates expansion from contraction. However, the figure was significantly better than the flash PMI of 47. 2.
The PMI flash PMI data had been released the day after the Bank of England unexpectedly left its interest rates on hold. It could have been part of the central bank’s decision to leave rates unchanged. Given that the service sector, the UK economy’s dominant sector, which accounts for over 80% of the economy, didn’t perform as poorly as feared, this could leave the door slightly more ajar for another interest rate hike from the central bank.
There is no high-impacting UK economic data due to be released today, and there are no Bank of England officials due to speak either. As a result, the pound will be influenced by sentiment.
The euro underperformed the pound but did manage to rise against the US dollar despite a mixed bag of data. Eurozone retail sales slumped 1.2% month on month, a much larger fall than the 0.3% forecast and down significantly from 0.1% month-on-month decline in July.
The decline in sales comes as high interest rates and relatively high inflation keep household budgets under pressure.
Meanwhile, the service sector PMI contracted at a slightly slower pace, rising to 48.7 in September, up from 48.4.
Looking ahead, there is no high impacting eurozone economic data investors will be focused on a series of ECB officials who are due to speak and could shed some more light on the future path of interest rates.
