- Pound (GBP) rises after six days of losses
- Services PMIs remained at 54.3
- Euro (EUR) is resilient after mixed PMIs
- Eurozone composite PMI rises to 48.9
The Pound Euro (GBP/EUR) exchange rate is rising, snapping a six-day losing run. The pair fell -0.01% in the previous session, settling on Wednesday at €1.1675 and trading in a range between €1.1664 – €1.1899. At 09:00 UTC, GBP/EUR trades +0.03% at €1.1679.
The pound is inching higher after stronger-than-expected PMI data, which supports the view that the UK recession may already be over.
The February PMIs showed that the service sector grew at a faster pace than expected at 54.3, unchanged from January. Analysts had been expecting service sector activity to ease very slightly to 54.1.
Meanwhile, the manufacturing sector ticked higher from 47 in January to 47.1 in February. As a result, the composite PMI, which is a good gauge for business activity, rose to 53.3, up from 52.9 in February. This was much higher than expected and the strongest pace of growth since May.
Numbers suggest that the UK GDP growth rate could be around 0.2 to 0.3% in the first quarter, and the report also sees business optimism for the next 12 months climbing to its highest level since February 2022 before Russia’s invasion of Ukraine sent energy prices soaring.
Following the data, the market is now pricing in 68 basis points of rate cuts this year, totaling less than three 25 basis point cuts.
Separately, the euro showed some resilience after the PMI data, which was fairly mixed. The composite PMI, which is a good gauge of business activity, increased to 48.9 in February from 47.9, suggesting that the economic slump in the region is easing.
While the manufacturing activity fell from 46.6 to 46.2, suggesting the production recession continues, however, the service sector activity was more encouraging, rising to 50, well ahead of the 48.8 that was expected.
Looking ahead, eurozone final inflation data is expected to confirm consumer prices rose 3.3% in January. The minutes of the ECB meeting are also due to be released.
