On Tuesday the Pound Sterling to Euro (GBP/EUR) exchange rate jumped by 0.3% in response to impressive UK data.
The Pound also adopted a stronger position against several of its other main currency counterparts.
Sterling had derived modest support from a slightly better-than-forecast Markit Construction PMI on Monday and managed to extend gains against its European peer on Tuesday following the release of the Markit PMI for the services sector.
In a sign that the largest sector of the UK economy is still performing well, the UK’s Services PMI leapt from June’s reading of 57.7 to 59.1 in July.
The increase was substantially greater than the gain to 58.0 anticipated by economists.
The encouraging result also helped the UK’s Composite PMI rally last month, advancing from a negatively revised 57.9 in June to 58.8 in July.
The report detailed a marked increase in employment in the services sector as well as climbing activity and new business.
Markit’s chief economist Chris Williamson issued the following statement with the figures; ‘The vast services economy’s growth surge shows no sign of abating. The July PMI showed the sector expanding at the fastest rate since last November, as demand for services continued to increase at a rate rarely seen in the survey’s 18-year history. The buoyancy of the services and construction sector PMIs suggest the domestic economy clearly continued to boom in July, offsetting the cooling of growth seen in the manufacturing sector.’
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a high of 1.2607 – pushing back above 1.26 for the first time in several days.
The Pound Sterling to US Dollar (GBP/USD) exchange rate also rallied modestly, rising to 1.6888.
A slightly disappointing month-on-month retail sales gain for the Eurozone also helped the Pound maintain a stronger position.
Pound Sterling (GBP) Exchange Rate Forecast
The Pound is likely to maintain the upper hand against the Euro overnight and may extend gains tomorrow if the National Institute of Economic and Social Research’s GDP estimate for July impresses.
The Pound Sterling to US Dollar (GBP/USD) exchange rate may experience further fluctuations later today after the US publishes its services PMI and Non-Manufacturing Composite PMI.
US Factory Orders figures will also be of interest.
If the US reports add to the case for the Federal Reserve bringing forward its timeline for raising interest rates the Pound Sterling to US Dollar (GBP/USD) exchange rate could soften during the North American session.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6883,
Pound Sterling,,Euro,1.2602,
Pound Sterling,,Australian Dollar,1.8084,
Pound Sterling,,New Zealand Dollar,1.9762,
US Dollar,,Pound Sterling,0.5935,
Euro,,Pound Sterling,0.7932,
Australian Dollar,,Pound Sterling,0.5531,
New Zealand Dollar,,Pound Sterling,0.5057,
[/table]
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