- Pound (GBP) is supported by stronger-than-expected business activity
- Composite PMI rose to 54 from 52.8
- A jump in services activity supports euro (EUR)
- The service PMI rose to 52.9 from 51.5
The Pound Euro (GBP/EUR) exchange rate is holding steady after two days of losses. The pair fell -0.16% in the previous session, settling on Monday at €1.1589 and trading in a range between €1.1566 and €1.1619. At 12:00 UTC, GBP/EUR trades +0.01% at €1.1589.
The pound fairly matched against the euro after both regions posted encouraging business activity data.
UK businesses posted their fastest growth in activity in almost a year this month, with the PMI pointing to a larger-than-expected rebound. The composite PMI for the services and manufacturing sector rose to 54 in April, up from 52.8 in March, taking it to the highest level in almost a year.
Gains were led by a substantial rise in the services sector, with the PMI increasing to 54.9 from 53.1. Meanwhile, the manufacturing PMI effectively fell to 48.7 from 50.3, taking it below the 50 level that separates expansion from contraction.
According to S&P Global Market Intelligence, the data points to the economy burrowing at a quarterly pace of 0 point 4% in April, which is up from an estimated 0.3% in the three months to March.
However, the data also showed that business costs rose at the fastest pace in nearly a year due to rising wages and higher prices for transport and raw materials. This could lead the Bank of England to be more cautious about cutting interest rates soon.
Business activity in the eurozone also expanded at its fastest pace in almost a year thanks to a recovery in the service industry, which offsets a deeper downturn in manufacturing.
The services PMI rose to 52.9 in April, up from 51.5 in March and well ahead of the 51.8 expected. Meanwhile, the manufacturing PMI fell to 50, 2 45.6, down from 46.1, defying expectations of a rise to 46.6.
The data shows a growing gulf between. Services and factory output
Meanwhile, the composite PMI recovered to 51.4, up from 50.3, well ahead of the forecast.
The data supports the view that the eurozone economy has started to recover the recent downtown.
