- Pound (GBP) falls despite manufacturing activity growing at a two-year high
- UK input prices & costs eased
- Euro (EUR) rises after manufacturing PMI was revised higher
- Input prices increased
The Pound Euro (GBP/EUR) exchange rate is falling after gains across last week. The pair rose 0.69% in the previous week, settling on Friday at €1.1882 and trading in a range between €1.1799 and €1.1904. At 13:00 UTC, GBP/EUR trades -0.08% at €1.1872.
The euro is rising after eurozone manufacturing activity unexpectedly improved in August, although it remains entrenched in contraction.
The eurozone manufacturing PMI was upwardly revised to 45.8 in August from 45.6 in the preliminary reading and in July. This marks the third straight month of significant decline, suggesting the sector is still steeped in a prolonged downturn.
Despite a continued drop in new orders, both domestic and international goods prices rose for the first time since April last year, adding to the challenges faced by the European Central Bank.
Delving deeper into the figures, the country-specific PMI data revealed Greece was ahead with a manufacturing PMI of 52.9, although this was also an 8-month low; however, Germany recorded a PMI of 42.4, which was a 5-month low.
Still, the euro is clinging to the increase in selling prices for the first time since April 2023. The data comes after figures on Friday showed that eurozone inflation cooled to 2.2% year on year in August, down from 2.6% in July. ECB policymaker Villeroy de Galhau also said he believes it’s time to start cutting rates.
Meanwhile, the UK manufacturing PMI rose to a 26-month high in August. According to S&P Global’s UK manufacturing PMI, there were further signs of price pressures easing the rates of inflation of input costs, and selling prices slowed.
The PMI was at 52.5 in August, up from 52.1 in July and unchanged from the preliminary reading.
Delving deeper into the figure, August also saw the level of new business orders rise for a fourth straight month, and there were also reports of better market sentiment.
