The Euro advanced back above the 0.80 level against the Pound on Thursday after disappointing retail sales data weighed heavily on the UK currency and distracted economists from another bout of mixed reports out of the Eurozone.
Earlier in the session, weak manufacturing data out of France caused the Euro to soften against most of its major peers but once again, data out of Germany took some of the edge off.
According to Markit, its Manufacturing Purchasing Managers Index (PMI) for France showed that activity in the sector contracted at its fastest pace in more than a year in August, adding to worries over the health of Europe’s second largest economy.
The French Manufacturing PMI fell to a seasonally adjusted figure of 46.5, a decline from the previous figure of 47.8 in July.
The figure was below economist expectations for the index to hold steady in August.
Despite that the seasonally adjusted Markit Flash France Composite Output Index, which measures the combined output of both the manufacturing and service sectors rose from 49.4 in July to a four-month high of 50.0 in August.
PMI data for the wider Eurozone showed that manufacturing across the region declined to a 13-month low in August by coming in at 50.8, down from the preceding month’s figure of 51.8.
The figure was worse than the reading of 51.3 forecast by economists.
Any figure above 50 in a PMI report indicates expansion whilst one below indicates contraction.
With the regions recovery in doubt economists are expecting labour growth to remain weak.
Unemployment remains stubbornly high right across the Eurozone.
“The Eurozone economy continued to make steady progress in August, as the region looks to bounce back following the recent weaker-than-expected GDP readings for the currency union. However, with the PMI Output Index slipping slightly to 52.8, the region remains on course to register growth of only around 0.3%-0.4% in the third quarter, a level that is unlikely to stimulate any real turnaround in the labour market,’ said Rob Dobson, senior economist at Markit.
Despite the relatively poor PMI data, the Euro was able to make gains against the Pound as the latest Retail Sales Data out of the UK raised doubts over the strength of the country’s economic recovery.
According to the Office for National Statistics (ONS) retail sales in the UK increased by just 0.1% in July, below economist forecasts for a gain of 0.4%.
Retail sales in June were revised to 0.2%.
Retail sales climbed at an annualised rate of 2.6% in July, worse than the 3% gain expected by economists.
Following the release of the data, the Pound fell against several major peers.
Euro Exchange Rate News:
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3268 ,
Euro,
,British Pound,0.8000 ,
Euro,,Australian Dollar,1.4298 ,
Euro,,Canadian Dollar,1.4560 ,
[/table]
