- Pound (GBP) is flat after three days of gains
- UK composite PMI fell to 49.9 & retail sales slumped
- Euro (EUR) is unchanged after recent losses
- EZ composite PMI fell to a 10-month low
The Pound Euro (GBP/EUR) exchange rate is holding steady after three days of gains. The pair rose 0.15% in the previous session, settling on Thursday at €1.2014 and trading in a range between €1.1984 and €1.2023. At 11:00 UTC, GBP/EUR trades +0.0% at €1.2014. The pair is on track to rise 0.38% this week.
The pound has fallen sharply against the US dollar but is holding steady against the equally weak euro after data showed that British retail sales tumbled in October. According to official data, retail sales fell by 0.3% month on month last month, worse than the 0.3% full economists had expected. This marked the sharpest decline since June, when sales fell 1%.
The data shows that consumers held back on spending ahead of the Labour government’s first budget on October 30.
Meanwhile, UK business activity slipped into contraction territory in November, dropping to 49.9 from 51.8 in October. Manufacturing PMI fell to 48.6, and the dominant services PMI dropped sharply from 52.1 to 50, the level that separates expansion from contraction.
The euro has fallen sharply against the US dollar but is equally matched against the weaker pound as eurozone PMI data sounds alarm bells for growth.
The concept PMI, which is considered a good gauge for business activity, dropped to 48.1 in November, down from 50, moving into contraction tree territory and marking a 10-month low.
Both manufacturing PMIs and services PMIs fell by more than expected and contracted.
The data could be a wake-up call for policymakers as the economy continues to show signs of weakness.
As far as the EUE is concerned, there was a small increase in input cost inflation in the service sector, but that’s most likely related to wage growth. Output prices rose slightly but remained below last year’s average.
The weakness comes amid a political mess in the euro zone’s largest economies. France’s government struggles to pass a budget, and Germany heads for elections in February. Meanwhile, Trump is planning 10% across-the-board tariffs.
