This week, the Pound Euro exchange rate rose over the past week as Sterling sentiment was boosted by some upwardly revised UK PMIs.
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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 drop in risk appetite saw the GBP/EUR exchange rate hit its worst level of the week on Tuesday, before the pair quickly recovered as market sentiment recovered.
Midweek, the pound caught the bids following the latest UK services PMI.
Finalized September figures saw the index revised upwards from 47.2 to 49.3. While this was still a contraction, it painted a much less worrying picture of the UK’s economic performance in the third quarter.
Meanwhile, the euro faced resistance in mid-week trading in response to some disappointing retail sales figures in the eurozone.
However, the pound failed to maintain these gains in the second half of the session. At the same time, the euro benefited from the weakening of the US dollar.
Closing out the week was the release of the latest factory order data from Germany. August data helped the euro end the session on a positive note after reporting a stronger-than-expected recovery in orders growth.
Will falling UK GDP affect sterling?
The highlight of next week’s data calendar appears to be the latest UK GDP figures.
Economists predict that the monthly GDP indicator for August will report another contraction in the UK economy.
This is likely to reignite fears of a UK recession and could see the pound face significant pressure on Thursday.
Meanwhile, next week’s session will begin with the release of Germany’s latest industrial production figures. If these figures are as positive as the August factory order data, they could give the euro an advantage early in the session.
Otherwise, notable data is scarce next week and as such, the movement in the GBP/EUR exchange rate may be mainly influenced by external factors. With the euro potentially losing if market risk appetite continues to improve.
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