The Pound Euro (GBP/EUR) exchange rate traded in a narrow range on Tuesday as markets digested the latest services PMI releases from both the UK and the Eurozone.
Pound to Euro (GBP/EUR): 1.14471 (-0.17%)
Pound to Dollar (GBP/USD): 1.32489 (+0.12%)
Euro to Dollar (EUR/USD): 1.1574 (+0.29%)
DAILY RECAP:
The Pound (GBP) moved without a clear direction following the UK’s final services PMI results for March.
The index was revised lower, from 51.2 to 50.5, marking the slowest expansion in 11 months and signalling that activity is close to stagnation.
However, the softer growth signal was partly offset by a sharp rise in price pressures, which helped to reinforce expectations for further Bank of England interest rate hikes.
This tempered downside pressure on Sterling and left GBP trading in a relatively narrow range.
Meanwhile, the Euro (EUR) also struggled to establish a clear direction as markets assessed the Eurozone’s own services PMI release.
The bloc’s final reading slipped to a ten-month low of 50.2 in March, down from 51.9 in February, although slightly above the preliminary estimate.
As with the UK data, the report highlighted rising price pressures, supporting expectations that the European Central Bank will tighten monetary policy further.
This left EUR similarly rangebound, resulting in limited movement in GBP/EUR overall.
GBP/EUR Forecast: Contracting Eurozone Sales to Weigh on the Euro?
Looking forward, Wednesday kicks off with Germany’s latest factory orders data. An expected recovery in April could lend the common currency some early support.
Later in the morning we have the Eurozone’s latest retail sales figures. Markets expect sales growth to have contracted again in February, with the data forecast to come in at -0.2%. Such a result could put some pressure on the Euro.
Meanwhile, UK economic data is thin on the ground on Wednesday, potentially leaving the Pound lacking a strong directional bias.
New developments in the Middle East crisis could infuse markets with volatility on Wednesday, after US President Donald Trump’s deadline for Iran to open the Strait of Hormuz passed. Expect to see choppy movement in the Pound to Euro pairing as markets respond to the latest actions from the US and Iran.
