The Euro Pound (EUR/GBP) exchange rate has weakened this morning as a strengthening US Dollar limits the appeal of the single currency this morning.
At the time of writing the EUR/GBP pairing are trading around the £0.8593 as EUR is able to limit any major losses on the back of recent PMI data from the Eurozone.
Euro (EUR) Weakens Despite Positive Services PMI
The Euro has found itself weakening against many of its rivals this morning as a strengthening US Dollar causes EUR to suffer.
However, limiting any losses for the Euro this morning is the latest PMI data from the Eurozone, the most recent services PMI has shown the strongest growth since 2018.
Chris Williamson, Chief Business Economist at IHS Markit commented on the latest Eurozone PMI saying:
‘After Covid fighting measures were tightened to the harshest for a year in April, restrictions eased considerably in May on average. These measures are on course to moderate further at least until the autumn, assuming further significant Covid waves are avoided.’
‘This should facilitate the further return to more normal business conditions as the summer proceeds. Business optimism for the year ahead has consequently hit the highest for over 17 years.’
Pound (GBP) Bolstered by Latest PMI Data from the UK
The Pound has seen itself bolstered this morning following the release of May’s PMI data from the UK.
The IHS Markit Services PMI from the UK rose above market forecasts to 62.9 points during May, the fastest rate of output growth for 24 years.
Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, commented on the latest PMI data, saying:
‘As Covid restrictions were in retreat, a sunnier aspect in the sector was maintained last month and service businesses built on recent improvements with the quickest level of growth since 1997.’
‘Underpinned by strong business optimism, and confidence in successful vaccine drives, service providers saw new orders increase at the fastest rate since October 2013 as uninhibited consumers enjoyed their freedom and spent their savings.’
However, investors remain cautious surrounding Sterling as Cabinet Office Minister Michael Gove has claimed Boris Johnson’s government is ‘open-minded’ about extending furlough, which some may see as a hint restrictions will not be easing as soon as first expected.
Euro Pound Exchange Rate Outlook: Eurozone Retail Sales in Focus
Tomorrow will see the release of the latest retail sales data from the Eurozone for April which could drive movement in the EUR/GBP pairing.
The most recent retail sales from the bloc are forecast to show that year-on-year sales increased to 21%.
The EUR/GBP pairing will continue to be driven by any further coronavirus developments over the weekend with Sterling investors keeping an eye on the Indian variant of the virus, and whether the UK’s lockdown easing will be delayed to combat a rise in infections.