- Pound (GBP) rises and gains across the week
- UK composite PMI unexpectedly rose to 50.9
- Euro (EUR) falls amid concerns over weak growth
- Eurozone composite PMI rose to 50.2
The Pound Euro (GBP/EUR) exchange rate is rising for a second straight day. The pair rose 0.23% in the previous session, settling on Thursday at €1.1858. It traded in a range between €1.1822 and €1.1865. At 21:30 UTC GBP/EUR trades 0.32% higher at €1.1897. The pair rose +0.47% across the week.
The pound rose on Friday after UK data showed that growth ticked cautiously higher in January, although employment and optimism contrasted further while price pressures rose.
The S&P composite PMI, which is often considered a good gauge for business activity rose modestly to 50.9 this month, up from 50.4 in December and reaching a 3-month high. This defied expectations of a fall towards 50.00, the level that divides expansion from contraction.
The data comes afer figures last week showed that growth was stalling and the labour market weakening following the government’s first budget in October. The data won’t calm BoE concerns about the economic outlook.
The BoE is expected to cut interest rates by 25 basis points in February.
The euro is falling despite encouraging PMI data. The composite PMI showed that business activity moved back into expansionary territory in January. The composite PMI rose to 50.2, up from 49.6 in December and well ahead of forecasts of 49.7. The services PMI was slightly weaker than forecast, at 51.4, down from 51.6 in December. Economists expected the PMI to remain unchanged. The manufacturing PMI showed that activity contracted at a slower pace in January, at 46.1, up from 45.1 in December.
While the data was better than expected, it still showed that the economy is stalling; while price pressures are increasing again, the stagnation growth environment appears to be taking priority as the ECB prepares to cut rates again next week.