- Pound (GBP) is rising after 4-days of losses
- UK services PMI was revised lower
- Euro (EUR) falls after PPI dropped 1%
- Services PMI was revised lower to 53.2
The Pound Euro (GBP/EUR) exchange rate is rising after four days of losses. The pair fell -0.06% in the previous session, settling on Tuesday at €1.1733 and trading in a range between €1.1729 and €1.1762. At 16:00 UTC, GBP/EUR trades 0.22% at €1.1758.
The pound is rising despite the UK service sector growing at a slower pace in May.
Data showed that the UK services PMI dropped from April’s 11-month high to 52.9 in May. Price pressures cooled to their lowest level in three years, which paves the way for the Bank of England to start cutting interest rates later this summer.
Meanwhile, the composite PMI, which includes manufacturing and services data and is considered a good gauge for business activity, was 53 in May, down from 54.1.
The S&P said that the data equates to GDP growth of 0.3% and the second quarter of the year half the pace of growth that was seen in the first quarter.
The news will disappoint Prime Minister Rishi Sunak as the ruling-Conservatives and Labour parties ramp up their election campaigns.
The euro is falling after weaker-than-expected wholesale inflation and a downward revision to the services PMI data.
Wholesale inflation, as measured by the producer price index, fell by 1% month on month in April after falling 0.4% in March. This was also below the -0.5% fall that economists had expected. On an annual basis, PPI was also weaker than expected at 5.1%.
Falling PPI bodes well for the inflation outlook and points to ongoing cooling in consumer price inflation. The data is likely to be well received by the ECB ahead of tomorrow’s interest rate decision where the central bank is expected to cut rates.
Eurozone business activity, as measured by the composite PMI, rose to 52.2 in May, up from 51.7 in April, slightly missing forecasts of 52.3.