- Pound (GBP) is rising after steep losses yesterday
- UK services PMI rose to 54.5 I August
- Euro (EUR) is falling after yesterday’s gains
- Eurozone PMI data confirmed sluggish growth
The Pound-Euro (GBP/EUR) exchange rate is rising after losses yesterday. The pair fell -0.54% in the previous session, settling on Tuesday at €1.1504. It traded between €1.1475 and €1.1575. At 17:30 UTC, GBP/EUR trades 0.13% higher at €1.1523.
The pound is pushing higher on Wednesday as the markets continue to scrutinise the fiscal position of the UK and digest stronger than expected UK services. Activity
phase over the UK government’s ability to keep its finances under control pushed 20 and 30-year borrowing costs to their highest level since 1998 yesterday. Most OF these fears continue to linger, the chancellor Rachel Reeves announced, but the new budget will be unveiled on November 26.
Whilst the government has been struggling with weak economic growth, today’s services PMI data would have been well received. The services PMI rose to 54.2 in August from 51.8 in July, reaching its highest level since April 2024. This was also higher than the preliminary reading of 53.6 and comfortably exceeded the 50 mark, which separates expansion from contraction. The composite PMI, a good gauge for business activity, rose to a 12-month high of 53.5 in August, up from 51.5 in July, and ahead of the initial reading of 53.
The euro is falling slightly against the pound, as data show that economic growth remained sluggish last month. The eurozone economy expanded but at a snail’s pace as weaker service sector growth offset improved manufacturing output.
The eurozone composite PMI rose to 51 in August, up from 50.9 in July, marking a 12-month high but still indicating that growth was only modest.
Delving into the data, Spain remained the best performer despite growth easing, followed by Italy, which also saw a slight acceleration. However, Germany’s expansion slowed, and France remained in contractionary territory.