Pound Euro Exchange Rate Holds Steady Following PMI Releases

September 5, 2024 - Written by John Cameron

STORY LINK Pound Euro Exchange Rate Holds Steady Following PMI Releases

The Pound Euro (GBP/EUR) exchange rate experienced minimal movement on Wednesday following the release of the UK’s and Eurozone’s finalised services PMIs.

At the time of writing, the GBP/USD was trading at around $1.3134, virtually unchanged from Tuesday’s opening levels.

The Pound managed to maintain its position against most of its major counterparts on Wednesday, thanks to the release of the UK’s crucial services PMI.

The finalised index for August exceeded forecasts, rising from 52.5 to 53.7, surpassing the anticipated 53.3.

This data provided some support to GBP exchange rates as August’s index reached its highest level in four months.

Tim Moore, Economics Director at S&P Global Market Intelligence commented:

‘August’s data highlighted a recovery in UK service sector performance as improving economic conditions and domestic political stability helped to bolster customer demand. New business again increased at a robust pace after a lull in decision-making earlier this summer. This fuelled the fastest upturn in service sector activity since April and extended the current period of growth to ten months.’

The Euro (EUR) struggled to attract investor interest on Wednesday following the release of the Eurozone’s services PMI.

The data fell slightly short of market expectations for August, yet it still indicated robust growth within the expansion territory (a score above 50). The index increased from 51.9 to 52.9, just below the predicted 53.3.

However, the single currency remained largely unchanged after the release as the boost in the services sector was primarily linked to the Paris Olympic and Paralympic Games.

HCOB noted: ‘The Olympic Games in Paris brought plenty of victories, and the French service sector was certainly among the winners. The latter helped drive accelerated growth in the eurozone's service sector for August. But the big question is whether this boost is sustainable. The positive vibes from the Games and the ongoing Paralympics might carry through into September in part, but we expect the slowdown in growth, which started in May, to likely resume in the coming months.'

GBP/EUR Exchange Rate Forecast: Eurozone Data to Influence Movement

Looking ahead, the Pound Euro exchange rate is expected to be driven by significant data releases from the Eurozone on Thursday.

First, the latest German factory orders for July are anticipated to show a considerable decline. If confirmed, this downturn in the Eurozone’s largest economy could weigh on the Euro.

Following that, the Eurozone will release its latest retail sales figures, which are expected to show a slight improvement in July. If the data meets expectations, it could offer some support to the Euro.

In contrast, UK data is expected to be sparse for the remainder of the week. This could result in the Pound trading in line with broader market risk sentiment. Should market conditions improve, Sterling may find some support.

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TAGS: Pound Euro Forecasts