ExchangeRates.org.uk - At the time of writing, GBP/EUR traded at around €1.1811, virtually unchanged from Wednesday’s opening rate. The Pound (GBP) traded mostly flat against the majority of its peers on Wednesday following the publication of the latest services PMI reading. The index eased slightly in June and fell from 52.9 in May down to 52.1 in June, however, beat preliminary estimates it would drop to 51.2.
Joe Hayes, Principal Economist at S&P Global Market Intelligence said: ‘We are seeing some evidence of a pre-general election seize up across the UK services economy, with growth in business activity slowing to a seven-month low in June as the prospect of a change in government led to the adoption of a “wait-and-see” approach by some, restraining sales. We're on track for another quarter of GDP growth, according to Composite PMI data for the three months to June, albeit one that will be less punchy than the first quarter's 0.7%. Prices still continue to show a high degree of stickiness across the UK service sector, although input cost inflation once again trended lower in June.’
Despite the signs of ongoing expansion within the UK’s all-important services-sector, GBP investors were reluctant to place any aggressive bets ahead of the UK’s general election on Thursday.
Euro (EUR) Above Ground following PMI
The Euro (EUR) struggled to garner investor attention on Wednesday following a marginal downward revision in the Eurozone’s finalised services PMI. The Eurozone’s services sector slipped from May’s reading of 53.2 to 52.8, however, managed to beat forecasts of a 52.6 reading, expanding for a fifth consecutive month.
Economists at the Hamburg Commercial Bank (HCOB) noted: ‘Considering the upward revision versus the preliminary flash PMI figures, the chances are good that service providers will remain the decisive force keeping overall economic growth in positive territory over the rest of the year.’
However, the Euro remained flat against the majority of its peers as the safe-haven currency was undermined by an increase in risk appetite.
GBP/EUR Forecast: UK Election in Focus
Looking ahead, the primary catalyst of movement for the Pound Euro exchange rate this week will likely be the upcoming UK election. As a Labour government is widely priced in, any unexpected surprises on Thursday could see GBP exchange rates experience volatility at the end of the week. Turning to the Euro, the European Central Bank (ECB) will publish its latest meeting minutes on Thursday. As the central bank enacted an interest rate cut at its latest meeting, but provided very little forward guidance, EUR investors will look to the latest set of notes for any potential forward guidance surrounding the future of monetary policy. Risk appetite could also impact the GBP/EUR exchange rate this week. Should upbeat trade prevail this week, GBP/EUR could strengthen. However, should markets opt for safer assets instead, GBP/EUR could be undermined.
This content was originally published on ExchangeRates.org.uk
