- Pound (GBP) rose for a fifth straight day
- UK manufacturing PMI fell to a 9-month low
- Euro (EUR) is falling but recovering from session lows
- French politics & weak manufacturing data weigh on demand
The Pound Euro (GBP/EUR) exchange rate is rising for a fifth straight day. The pair rose 0.18% in the previous week, settling on Friday at €1.2041 and trading in a range between €1.1966 and €1.2068. At 15:00 UTC, GBP/EUR trades +0.13% at €1.2061.
The euro is falling but has recovered from the lows of the session as investors watch the latest developments in French politics and as manufacturing activity contracts further in November.
French Prime Minister Michel Barnier said the government would scrap budget reforms as a concession to Marine Le-Penn’s far-right coalition party. The move helped to calm worries that the government was on the brink of collapse.
This seems to be enough to bring the government back from the brink, but it won’t help resolve concerns over spending in the country so gains in the euro could be limited.
Meanwhile, eurozone manufacturing activity remains weak. The manufacturing PMI was 45.2 in November, down from 46 in October, reflecting a deepening contraction in the sector.
The downtown was widespread, with activity falling across the eurozone’s major economies, including France and Germany. The slump in the sector is expected to continue into next year.
The pound is rising against the euro but falling against the USD after disappointing UK manufacturing data.
The manufacturing PMI slumped to 48 in November, a nine-month low down from 49.9 in October. This was a downward revision from the preliminary reading of 48.6. Orders from domestic and foreign customers fell, and ongoing supply chain disruptions raised costs.
The domestic weakness comes after the UK labor market labor government budget, which will see wins over eyes employment taxes and an increase in minimum wages.
