- Pound (GBP) is falling after gains yesterday
- UK manufacturers see sharpest rise in cost inflation since 1992
- Euro (EUR) is rising despite weak PMI data
- Eurozone composite PMI falls to a 10-month low
The Pound-Euro (GBP/EUR) exchange rate is falling after gains yesterday. The pair fell -0.09% in the previous session, settling on Monday at €1.1564. The pair traded between €1.1498 and €1.1590. At 16:30 UTC on Tuesday, GBP/EUR trades -0.09% at €1.1553.
The pound is falling after disappointing economic activity data.
The latest private sector data pointed to a sharp deceleration in growth as the Middle East conflict begins to weigh on economic activity.
UK manufacturing PMI edged slightly lower to 51.4 from 51.7, while the services PMI fell more notably from 53.9 to 51.2, marking a six-month low.
As a result, the composite PMI declined from 53.7 to 51.0, also its lowest level in six months.
The slowdown reflects weakening demand across both sectors, with firms citing heightened risk aversion, disruptions to travel and supply chains, and the impact of higher interest rates.
At the same time, inflationary pressures are accelerating sharply. Rising energy prices have pushed up input costs, with manufacturing cost inflation rising to its highest level since 1992.
Attention will now turn to UK CPI data, which is expected to show inflation holding steady at 3.1% year-on-year in February, before the Iran conflict began.
The euro is rising against the pound but falling against the US dollar as investors digest the latest business activity data.
Eurozone private sector growth almost stalled in March, while inflation expectations surged amid mounting evidence that the region is already being impacted by the US–Israel conflict with Iran.
The composite PMI fell to a 10-month low of 50.5 in March, down from 51.9 in February, as the Middle East conflict pushed input costs to their highest level in more than three years.
The data is raising stagflation concerns, with the conflict driving prices higher while weighing on growth.
Separate data showed that consumer confidence in the bloc has fallen to its lowest level since late 2023, marking one of the sharpest declines on record as economic pressures weigh on households.
