GBP/EUR: Brexit Nerves Weigh On Pound
  • Pound (GBP) edges higher ahead of PMI data
  • UK GDP data is due to show growth in April
  • Euro (EUR) falls as German ZEW economic sentiment remains weak
  • ECB Lagarde will speak again

The Pound Euro (GBP/EUR) exchange rate is rising for a third straight day. The pair rose +0.07% in the previous week, settling on Monday at €1.1692 and trading in a range between €1.1673 – €1.1710. At 08:35 UTC, GBP/EUR trades +0.07% at €1.1700.

The pound pushed higher against the euro in the previous session despite a lack of fresh fundamental drivers. stagflation remains a real concern, although Chancellor of the Exchequer Jeremy Hunt said that he sees inflation cooling to 5% by the end of the year, down from 10% at its peak.

looking ahead, attention now turns to UK services activity data which is expected to fall to 48.7 in August d,own from 51 in July. The level 50 separates expansion from contraction. Meanwhile, the composite PMI, which is considered to be a good gauge for business activity, is expected to fall to 47.9 from 48.6.

Weak business activity could raise fears that the UK economy is heading towards a recession at a time when inflation is still Ava three times the Bank of England’s target.

The euro fell in the previous session despite hawkish commentary from European Central Bank president Christine Lagarde. Lagarde warned central bankers should be careful to keep inflation expectations anchored.

Meanwhile, eurozone consumer confidence deteriorated further, painting a gloomy outlook for the region’s economy.

Attention will now turn to eurozone PMI data, which is expected to show that the composite PMI contracted further in August, dropping to 47 from 48.6. The data comes after manufacturing PMI data remained below 50 the level that separates expansion and contraction for a fourteenth straight month.

In addition to PMI data, ECB President Christine Lagarde is due to speak again today, as well as several other ECB officials. Investors will continue looking for clues as to whether the central bank will hike rates again in September.