This week saw the Pound Euro exchange rate drifted higher over the past week, as Sterling sentiment was buoyed by some upwardly revised UK PMIs.
Pound supported by positive revision to private sector growth
The Pound Euro exchange rate initially firmed this week. Sterling was supported by an upwardly revised UK manufacturing PMI. While the single currency was undermined by its negative correlation with the US Dollar.
A slump in risk appetite saw the GBP/EUR exchange rate strike its worst level of the week on Tuesday, before the pairing quickly rebounded as market sentiment recovered,
The middle of the week then saw the Pound catch bids in the wake of the UK’s latest services PMI.
September’s finalised figures saw the index revised up from 47.2 to 49.3. While this was still a contraction, it painted a far less worrying picture of the UK’s economic performance in the third quarter.
Meanwhile, the Euro faced resistance in mid-week trade in response to some disappointing Eurozone retail sales figures.
However, the Pound failed to sustain these gains into the second half of the session. While at the same time, the Euro benefitted from a weakening of the US Dollar.
Closing out the week was the publication of Germany’s latest factory orders data. August’s data helped the Euro to end the session on a positive note after reporting a stronger-than-expected recovery in order growth.
Decline in UK GDP to drag on Sterling?
The highlight of next week’s data calendar looks to be the UK’s latest GDP figures.
Economists forecast the August’s monthly GDP indicator will report another contraction in the UK economy.
This is likely to reignite UK recession fears and could see the Pound face significant pressure on Thursday.
In the meantime, next week’s session will be kicked off by the release of Germany’s latest industrial production figures. If these figures print as positively as August’s factory order data it could give the Euro a leg up at the start of the session.
Notable data is otherwise thin on the ground next week, and as such movement in the GBP/EUR exchange rate may be influenced primarily by external factors. With the Euro potentially losing out if market risk appetite continues to improve.
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