GBP/EUR Exchange Rate Strengthens as Eurozone PMIs Disappoint

October 25, 2024 - Written by Tim Boyer

STORY LINK GBP/EUR Exchange Rate Strengthens as Eurozone PMIs Disappoint

The Pound to Euro (GBP/EUR) exchange rate traded with modest gains on Thursday morning, as markets digested the latest PMI releases from both the UK and Eurozone.

At the time of writing, GBP/EUR was trading around €1.1999, up approximately 0.2% from Thursday’s opening levels.

The Euro (EUR) came under pressure on Thursday, in response to the Eurozone’s latest PMIs.

October’s preliminary figures highlighted another contraction in the bloc’s private sector. Last month’s composite PMI printed at 49.7, slightly better than August’s 49.6 but still below the crucial 50-mark, signalling ongoing contraction.

The decline was driven by continued weakness in the manufacturing sector, which recorded its 19th consecutive month of contraction.

Although the service sector showed some growth, the data also reported a falling in new orders and declining backlogs of work, raising concerns that the service sector may not sustain this growth for long.

The Pound (GBP) firmed on Thursday morning, although its gains were somewhat restrained following the release of weaker-than-expected UK PMI data.

The PMIs for October reported a moderation of growth in both the manufacturing and services sectors, in advance of the UK’s upcoming budget.

The report suggested that concerns about the budget, alongside global uncertainties and political risks, were surpressing business sentiment and spending in the UK.

GBP/EUR Forecast: Weak German Business Climate to Weigh Further on the Euro?

Looking ahead, the Pound to Euro exchange rate could extend its gains on Friday with the release of Germany’s Ifo business climate index.

Although economists expect a slight uptick in the index for October, it remains at a low level, which could put additional pressure on the Euro as we close out the week.

Meanwhile, with little UK economic data in short supply, GBP investors are likely to focus on any developments surrounding Chancellor Rachel Reeves’s upcoming budget as more details begin to emerge ahead of Wednesday’s full announcement.

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TAGS: Pound Euro Forecasts