- Pound (GBP) is rising after three days of losses
- UK services PMI rose to 55 in April
- Euro (EUR) is falling ahead of unemployment data
- OECD raised the eurozone GDP forecast
The Pound Euro (GBP/EUR) exchange rate is rising after three days of losses. The pair fell -0.08% in the previous session, settling on Thursday at €1.1683 and trading in a range between €1.1674 and €1.1704. At 10:00 UTC, GBP/EUR trades +0.07% at €1.1691.
The pound is inching higher after the UK services PMI data confirmed strong growth in the UK’s dominant sector.
The services PMI was upwardly revised to 55 in April, up from 53.7 in March, well above the 50 level, which separates expansion from contraction.
The strong growth comes as sticky service sector inflation is proving to be a hurdle to the Bank of England cutting interest rates sooner.
The data comes ahead of the Bank of England interest rate decision next week, where the central bank is widely expected to leave rates unchanged at 5.25%, a 15-year high.
Attention will be on the vote split, and other divisions within the Monetary Policy Committee. Some policymakers, such as David Ramsden, are in favour of cutting rates sooner, compared to chief economist Huw Pill, who sees no urgency in starting to cut rates.
The euro is falling but is on track to rise across the week as attention turns to euros and unemployment data. Eurozone unemployment is expected to hold steady at 6.5%. The data is in focus as ECB president Christine Lagarde has highlighted on several occasions that tightness in the labor market is a hurdle for cutting interest rates. That said, the ECB is still expected to cut rates in June for the first time.
Yesterday the OECD upwardly revised the eurozone’s growth forecast for this year and next to 0.7% in 2024 and one point 5% in 2025
The output revision comes as data from the region has started to show an improvement in the eurozone’s economic outlook.
