Pound-Euro could push higher if weaker German data weighs on the single currency, although stronger UK services activity continues to support Sterling.
The Pound to Euro (GBP/EUR) exchange rate traded in a narrow range on Wednesday as stronger-than-expected services PMI readings from both the UK and Eurozone largely offset one another.
At the time of writing, GBP/EUR was trading around €1.1662, little changed on the day.
DAILY RECAP:
The Pound (GBP) drew modest support after the UK’s final services PMI painted a stronger picture of activity in the country’s dominant sector.
The final reading showed the services PMI rising from 48.8 in June to 52.1 in July, exceeding both the preliminary estimate of 51.8 and signalling a return to expansion.
The upbeat survey reinforced confidence in the resilience of the UK economy, although the relatively small upward revision limited Sterling’s gains.
Meanwhile, the Euro (EUR) also benefited from encouraging services PMI data.
The Eurozone’s final services PMI rose from 49.4 to 51.7, slightly above the flash estimate of 51.6 and confirming the sector returned to growth in July.
The stronger survey provided modest support for the single currency, although the improvement was not enough to generate significant gains against the Pound.
Near-Term GBP/EUR Forecast: Eurozone Data to Dent the Single Currency?
Looking ahead, Germany’s latest factory orders report is expected to provide the first major catalyst for the Pound to Euro exchange rate on Thursday.
Markets anticipate order growth slowing sharply from 1.9% in May to 0.3% in June. A weaker-than-expected reading could weigh on the Euro.
Later in the morning, the Eurozone’s retail sales figures are also due for release. Forecasts suggest sales growth slowed from 0.2% to 0.1% in June, which could place additional pressure on the single currency.
With no significant UK economic releases scheduled, Sterling may trade largely in response to developments in the Eurozone and broader market sentiment.
Our currency coverage draws on live market data, official economic releases and published bank research.
