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Pound Euro (GBP/EUR) Exchange Rate Dips Following Eurozone PMI Data
The Pound Euro (GBP/EUR) exchange rate edged lower on Monday following the publication of the Eurozone’s latest manufacturing PMI data.
At the time of writing, GBP/EUR traded at around €1.1891, down roughly 0.2% from Monday’s opening rate.
The Euro (EUR) was able to post modest gains against most of its counterparts on Monday, partly bolstered by the Eurozone’s latest manufacturing PMI figures.
While October’s final index remained in contraction territory (below 50), it exceeded market expectations, climbing from 45.0 to 46.0, ahead of the predicted 45.9.
However, it wasn’t the morning’s positive data that primarily drove the single currency’s ascent, but rather a weakening US dollar (USD), given the Euro’s inverse relationship with the American currency.
As the US election kicks off on Tuesday, alongside the Federal Reserve’s impending interest rate decision on Thursday, markets appeared hesitant to wager on the ‘Greenback’, consequently strengthening the EUR exchange rate on Monday.
Pound (GBP) Holds Steady despite Lack of UK Data
The Pound (GBP) maintained its ground against most of its counterparts on Monday despite a slow start to the week’s UK economic calendar.
Even with the lack of economic drivers, GBP exchange rates managed to stay afloat, subtly bolstered by last week’s decline in expectations for Bank of England (BoE) interest rate cuts.
Following the UK Chancellor’s Autumn Budget announcement late last week, hopes that the budget could stimulate inflation and subsequently slow down the pace of monetary easing has led to a reduction in BoE rate cut bets.
Coupled with a guardedly optimistic market sentiment, these factors provided the risk-sensitive currency with some modest support on Monday despite the dearth of domestic data releases.
GBP/EUR Forecast: UK PMI to Drive Movement?
Looking forward, the main driver of movement for the Pound Euro exchange rate on Tuesday is expected to be the release of key UK data.
The UK is set to publish its final services PMI for October, which could put GBP exchange rates on the defensive at the start of Tuesday’s session if the data confirms a downturn in the country’s crucial services sector.
Shifting focus to the Euro, the most significant event on Tuesday will be a speech by European Central Bank (ECB) President
Christine Lagarde.
Lagarde’s speech could introduce volatility to the single currency if she makes any dovish remarks regarding the future of monetary policy.
