Euro to Pound (EUR/GBP) Exchange Rate Softens After Positive UK PMI Data
If you're looking to make an international money transfer, we recommend TorFX.
The Pound has surged on Tuesday following positive UK data figures which surprised, showing UK Services figures have risen to their pinnacle in the latter eight months.
UK Services PMI smashed economists’ forecasts of 58.0, instead reaching 59.1, showing more productivity in the UK than expected; figures over the 50 threshold denote expansion.
In addition, Composite PMI reached 58.8 in the UK, higher than the predicted 58.
Economist for Markit who conduct the survey, Chris Williamson, stated: ‘The domestic economy clearly continued to boom in July. The sustained strength of growth will add to calls for interest rates to start rising later this year. However… an absence of inflationary pressures means there is still a strong case for any tightening of policy to be delayed until 2015.’
Conversely the Eurozone PMI figures failed to grow as swiftly as expected. German Services PMI grew just above forecasts reaching 56.7; however, French and Italian Services and Composite PMI failed to reach expectations. Meanwhile the Eurozone as a whole failed to meet forecasts attaining only 53.8 in Composite, and 54.2 in Services; however both figures above 50 are still favourable.
The UK economy will experience a highly influential week with Wednesday seeing the release of Industrial and Manufacturing Production, followed by the UK Gross Domestic Product Estimate.
However Thursday will prove the most significant day for the Pound with the Bank of England announcing the Interest Rate Decision and Asset Purchase Target.
Interest rate speculation surrounds the Pound at the moment with some economists believing that a percentage of board members may change their stance on maintaining the current low interest rates.
Economist Howard Archer commented: ‘The very strong July purchasing managers’ survey for the dominant services sector provides a strong antidote to some recent signs that robust UK growth could be losing a little momentum.’
However with such favourable figures, the interest rate hike talks that surround the Pound are heating up causing Sterling to gain some strength against other majors.
The present GBP to EUR exchange rate rests stronger at 1.2599, reaching session highs of 1.2610, but volatility this week is expected dependent on the BoE statements.