The Euro pound (EUR/GBP) exchange rate is currently trading without a clear direction as the UK’s finalised manufacturing PMI fell short of expectations. At the time of writing, the EUR/GBP exchange rate is holding steady at €0.8547.
The pound (GBP) is struggling to make gains this morning following the disappointing finalised manufacturing PMI in the UK. The index printed at 48.7 in April, falling back into contraction territory after a brief uptick to 50.3 in March. This decline in new orders has led to a downturn in UK factory output, limiting the movement of the GBP.
On the other hand, the Euro (EUR) is experiencing muted trading as European markets are closed in observance of Labour Day. With thin trading conditions, the EUR is facing little notable movement against its major peers for the remainder of the session. However, high impact US data releases later in the day could bring some volatility to the EUR due to its negative trading correlation with the US dollar.
Looking ahead, the Eurozone’s upcoming unemployment figures on Friday could provide support for the common currency if the unemployment rate remains low at 6.5% in March. This could give the European Central Bank (ECB) more room to maintain its current base rate. Meanwhile, in the UK, the finalised services PMI on Friday could impact the GBP if it confirms a significant expansion in the sector.
Overall, market risk dynamics will continue to influence the movement of the euro pound exchange rate in the near term. A positive trading environment could strengthen the pound, while a more cautious market sentiment might favor the EUR.