- Pound (GBP) reached a 4-month peak
- UK services PMI rose to 51.4 in December
- Euro (EUR) is flat despite business activity data
- Eurozone composite PMI expanded every month in 2025
The Pound-Euro (GBP/EUR) exchange rate is unchanged after strong gains yestserday. The pair rose 0.58% in the previous session, settling on Monday at €1.1552. It traded between €1.1469 and €1.1557. At 12:30 UTC on Tuesday, GBP/EUR trades -0.01% higher at €1.1551.
The pound rose to its highest level in nearly four months against both the euro and the dollar on Tuesday, boosted by improved global investor sentiment and easing concerns about Britain’s fiscal position and thanks to hints from PM Starmer of a closer relationship with Europe.
On the data front, Britain’s dominant service sector ended 2025 on a slightly weaker note than previously thought. The final reading of the services PMI came in at 51.4, up from 51.3 in November, but was down from the preliminary reading of 52.1.
The data also showed that inflationary pressures across the service sector strengthened at the end of the year. Input prices rose to the highest level in seven months, and output price inflation rebounded from the low reached in November. Meanwhile, prices charged by firms spread out sharply, increasing at their fastest pace since August.
The BoE, which cut rates by 25 basis points to 3.75% in December, sees persistently high service price inflation as an obstacle to further rate cuts.
The euro is unchanged today after recent losses as investors digest the latest business activity data. The eurozone economy slowed in December, although 2025 ended with the strongest quarterly growth in more than two years, with solid momentum in the service sector offsetting valid factoring contraction.
The composite PMI, a good gauge of business activity, was 51.5 in December, down from a November 30-month high of 52.8. This was also below preliminary estimates of 51.9 but above the 50 level that separates expansion from contraction. The data shows that the economy expanded every month in 2025, a positivre run nit seen sice 2019.
