Pound to Euro Subdued following UK and Eurozone PMIs

December 5, 2024 - Written by David Woodsmith

STORY LINK Pound to Euro Subdued following UK and Eurozone PMIs

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

On Wednesday, the Pound (GBP) experienced a slight rise against several major currencies, driven by a mix of positive factors.

Firstly, Bank of England (BoE) Governor Andrew Bailey's comments gave the Pound a lift, as he reaffirmed his commitment to a gradual easing of UK monetary policy.

Moreover, the UK's final services PMI surpassed expectations, landing at 50.8 instead of the predicted 50.0, which added to Sterling's strength.

The currency also gained ground from a risk-on mood in the markets, reflecting its increasing sensitivity to risk.

On Wednesday, the Euro (EUR) faced difficulty in attracting buyers after the release of the Eurozone's finalized services PMI.

While the data was marginally better than expected, coming in at 49.5 instead of 49.2, it still indicated the first contraction in the services sector since January, weighing on EUR exchange rates.

Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, explained:
'Stagflation is a pretty nasty word, especially if you are a central banker, but that is what is hitting the eurozone right now. In
November, the economy started shrinking...'

Adding to the Euro's woes was a risk-on sentiment in the markets, which tends to favour more volatile currencies over safe-haven options like the Euro.

GBP/EUR Exchange Rate Forecast: Eurozone Data in the Spotlight

Looking ahead to Thursday, the main factor likely to influence the Pound Euro exchange rate will be the release of the Eurozone's latest retail sales data.

The data is expected to decline from 0.5% to -0.3% in October, and if this decrease in consumer spending is confirmed, it could dampen EUR exchange rates.

For the Pound, Thursday's economic calendar is devoid of any UK-specific data, which may lead to Sterling trading without a clear direction.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Euro Forecasts