The GBP/EUR rate currently sits just above the 1.18 level as Sterling once again starts the day of with an early jump.
At 9.30am morning there will be Markit Manufacturing Purchasing Managers Index for both the UK and Eurozone. Last month’s figure for the UK was a 3 year low, the release today though is expected to show an improvement. However a score of above 50 is considered to indicate growth but the expected result today is 49.
When the PMI was released last month it caused major volatility so anything other than the expected could create major movements.
Eurozone PMI could bring troubles
Alternatively the Eurozone PMI is expected to remain at the same level as last month but after worse than expected Consumer Price Index data yesterday along with a small jump in the unemployment rate it could be a little low. Business sentiment data is seen as one of the main drives of the financial markets especially after the Brexit vote. There’s been plenty of discussion as to how bad the fallout of the Brexit has been, so an improvement for the UK could settle minds further and help the rate improve.
Personally I think the GBP/EUR rate will move towards the 1.20 mark in the next month. It is worth considering the average for the rate over the last 10 years is mid 1.25’s so we’re not that far from the level. Obviously it’s a long way from last summer’s 1.40, but good economic data could keep a further interest rate cut away and help Sterling strengthen.
The Eurozone has a lot to contend with at the moment with regards to different nations delivering a variety of results. There is also no secret that some nations are a burden on the Euro and it seems that some of the Eurozone’s troubles are once again coming to the surface