The Pound Sterling to Euro (GBP/EUR) exchange rate weakened to its lowest level in nearly a month on Friday as a report showed that manufacturing growth in the UK slowed to a seven-month low in April. Most European markets were closed for the May Day holiday.
The Pound Sterling to Euro (GBP/EUR) Exchange Rate Slipped To a Session Low Of 1.3478
According to the Markit compiled UK Purchasing Managers Index (PMI), activity in the sector weakened from the reading of 54 seen in March to 51.9 in April. The figure was the lowest seen for seven months and heightened worries that the UK economy is slowing down.
Economists had been forecasting for the index to rise to 54.6. The fall was blamed on a slowdown in growth and concerns over next week’s general election.
‘Coming on the back of weaker-than-expected GDP numbers on Tuesday and only six days before the General Election, today’s UK PMI delivered less than positive news on the health of the manufacturing sector. Rates of expansion in production and order books both slowed sharply in April, meaning manufacturing is again unlikely to provide much of a boost to broader economic growth. This keeps the emphasis for maintaining the recovery highly reliant on the service sector,’ said Rob Dobson, senior economist at Markit.
The negative PMI adds to the disappointing UK GDP data report released on Tuesday, which showed that economic growth in the first quarter of 2015, slowed sharply to 0.3%, a drop from the 0.6% recorded in the final quarter of 2014.
Following the release of the PMI report the Pound weakened to its lowest level in three-weeks against the Euro and declined against the US Dollar and other major currency peers.
Greece Optimism Supports Euro (EUR) Exchange Rate
The Euro continued to receive support from the preceding session’s positive Eurozone inflation and Spanish GDP reports. The main driver for the single currency’s gains however was increased optimism that Greece will reach a deal with its creditors in the International Monetary Fund (IMF), European Central Bank (ECB) and Eurozone.
Greece proposed its most stringent measures since the left-wing Syriza government took power in January.
‘Talks have resumed and are now going on continuously over the coming days. They are being held in a constructive spirit…we welcome this step to deepen and intensify contacts,’ said European Commission representative Margaritis Schinas.
The Pound Sterling to US Dollar (GBP/USD) Exchange Rate Slipped To a Session Low of 1.5281
The weaker-than-forecast UK PMI report also sent the Pound falling against the US Dollar.
The Greenback could make further gains later in the session if upcoming US Manufacturing PMI data comes in positively.