- Pound (GBP) is falling after recent gains
- UK services PMI eased to 53.9 from 54
- Euro (EUR) is rising as energy prices slow
- Eurozone composite PMI expanded
The Pound-Euro (GBP/EUR) exchange rate is falling on Wednesday after two days of gains. The pair rose 0.28% in the previous session, settling on Tuesday at €1.1500. It traded between €1.1438 and €1.1509. At 19:30 UTC on Friday, GBP/EUR trades 0.12% lower at €1.1486.
The pound is slipping against the euro but rising against the US dollar as tensions in the Middle East ease slightly and as investors digest the latest business activity data for February.
Britain’s service sector, the largest sector of the economy, grew firmly in February, with the PMI at 53.9, down from January’s five-month high of 54 and in line with the preliminary reading.
Despite robust growth, the data showed that job cuts and price pressures persisted, which could be a worry for the Bank of England ahead of this month’s rate decision.
Hiring shrank for a 17th consecutive month, the longest unbroken decline since 2010. This comes after the OBR forecast yesterday that unemployment would rise to 5.3% this year, its highest level since the middle of the pandemic.
The euro is rising against the pound and the US dollar as worries about the US-Iranian situation have eased slightly. Oil prices are falling for the first time since the conflict began, easing energy worries on the data front. The eurozone’s composite PMI, which is considered a good gauge, rose to a three-month high in February. As output increased across both services and manufacturing
The composite eurozone PMI was up rose to 51.9 last month, up from 51.3 in January, remaining above 50, the level that separates expansion from contraction. This is the 14th straight month above the 50 level, helped by growth in Germany, the largest economy in the eurozone, reaching a four-month high.
The data is not expected to impact the ECB’s outlook, as the central bank is not likely to move on interest rates this year.