- Markit PMI surged to pre-Brexit levels
- Italian and EU Markit PMI slump weakens the Euro
- All eyes on tomorrow’s Construction PMI
- GBPEUR – 1.19 | GBPUSD – 1.32
UK continues to shrug off post-Brexit gloom
This morning’s Manufacturing PMI is yet another release to defy the recent Brexit vote. The data, which looks at business conditions within the sector has significant implications for the UK’s GDP. Given that July’s release saw record slumps, the latest release provides further hope for the UK economy in a post-Brexit environment.
Elsewhere in Europe paints a slightly different picture, and raises further concerns for the ECB – who have limited options left to stimulate the economy.
Consumer price data released for the Eurozone yesterday highlighted slowing growth, which may prompt the ECB to stimulate the economy with further QE. The other question raised is whether the Eurozone is now being negatively impacted by the UK’s vote to leave the EU.
And to add to further concerns within the Eurozone, this morning’s poor PMI data for the EU will not sit for the Euro. GBPEUR exchange rates have boomed over a cent since the news.
GBPEUR exchange rates to hit 1.20?
Tomorrow’s Construction PMI for the UK could add further momentum for Sterling, whilst the UK does appear to be shrugging off the recent Brexit vote, I do still hold the view that these gains will not be permanent.
I do however see GBPEUR exchange rates passing the 1.20 mark in the next week or two. If you are buying Euros before the new year, I would wait a few weeks and see how economic data continues to reveal itself. The upcoming US elections could also present more opportunities for Sterling as well. That being said, I am expecting the highs to dry up as we approach Christmas, and further news of Article 50 to spook investors.