- Pound (GBP) falls after gains last week
- UK manufacturing PMI was upwardly revised to 46.9
- Euro (EUR) rises on hopes of a Ukrainian peace deal
- European leaders pledge to increase defence spending
The Pound Euro (GBP/EUR) exchange is falling after gains last week. The pair rose 0.37% in the previous week, settling on Friday at €1.2120. It traded in a range between €1.2037 and €1.2136. At 09:30 UTC, GBP/EUR is trading -0.04% at €1.2115.
The euro is rising on hopes of a Ukrainian peace deal even after a meeting between U.S. President Trump and Ukrainian President Zelensky didn’t go as well as planned. Instead, UK Prime Minister Keir Starmer announced a coalition of the willing led by the UK and France aimed at ending the ongoing war in Ukraine. European natives of together a piece delta present to the US.
Meanwhile, Germany, which could also play a key role in Europe’s defence spending surge, amid reports that the coalition talks include discussions surrounding the establishment of special funds dedicated to defence and infrastructure investment.
On the data front, manufacturing PMIs were upwardly revised in Europe and Germany to 247.6 and 46.5, respectively. Meanwhile, eurozone inflation is to 2.4% from 2.5%, slightly hotter than the 2.3% forecast. The ECB is still expected to cut interest rates by 25 basis points when it meets on Thursday.
The pound is rising against the dollar but heating lower against a stronger euro despite an upward revision to UK manufacturing data. The manufacturing PMI was lifted to 46.9, up from 46.4 in the preliminary reading for February. The level 50 separates expansion from contraction.
The data shows that factories cut staff at the fastest pace since 2020 as the government payroll tax increase moved lift costs. PMI’s job measure fell to its lowest level since May 2020. The rise in National Insurance contribution announced by finance minister Rachel Reeves in the October budget will take effect from April first. This is also a date for a 7% increase in the minimum wage.
However, manufacturers also turned more positive, with optimism reaching a six-month high as they hoped for a pickup in the economy.
