The Euro tumbled to a fresh 21-month low against the Pound on Wednesday after the UK currency was boosted by the release of stronger-than-expected Construction PMI data.
Sterling climbed higher following the release of the latest Construction PMI which increased to 62.6 in June from the previous month’s figure of 60.0. Economists had been forecasting for a decline to 59.5. The report also showed that construction companies are hiring staff at their fastest levels since the survey began back in 1997.
“Clearly much of the positive news is coming from the residential sector, with demand for new houses high. However, with the commercial market continuing to recover, there is evidence of ever-improving health across the entire sector”, said the global corporates managing director at Llyods Commerical Banking.
The strong data adds to yesterday’s better-than-forecast UK manufacturing PMI data and further highlights the divergence between the strengthening UK economy and the stagnation being witnessed in the Eurozone.
The data also raised expectations that the Bank of England will introduce an interest rate rise before the end of the year and suggests that the UK economy will see strong growth in the second quarter of the year.
The Euro meanwhile was weakened after a report on Producer price inflation in the Eurozone fell for a fifth consecutive month in May, highlighting concerns over the risk of a deflationary cycle establishing itself in the region.
Eurostat said that its producer price index slipped by a seasonally adjusted figure of 0.1% in May, in line with economist forecasts. Year-on-year, the PPI declined at an annualized rate of 1% in May, meeting forecasts after falling at a rate of 1.2% in April.
Today’s Eurozone GDP growth rate also matched forecasts. The third estimate showed that the region’s economy expanded by just 0.2% on a quarterly basis whilst year on year it expanded by 0.9%.
The Euro could make further losses on Thursday if the latest Eurozone composite PMI and services PMI data comes in below forecasts. Retail sales for the Eurozone are also due for release.
Euro Exchange Rate News:
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