The Pound Sterling (GBP) to Euro (EUR) exchange rate weakened for a fifth consecutive day on Friday after data showed that the UK’s manufacturing output grew at its slowest pace in a year in July.
According to Markit, its manufacturing index dropped from June’s revised figure of 57.2 to 55.4 in July, below economist forecasts for a figure of 57.2.
The report also showed that the number of new orders in the sector dipped from June’s reading of 60.6 to 57.8 last month.
After the data was released the GBP/EUR exchange rate weakened by 0.42% to 1.255 and the GBP/USD exchange rate slumped to a new one and half month low of 1.682.
The fall against the US Dollar dragged the exchange rate to its lowest level since June 12.
The slowdown is in line with forecasts made by the Bank of England who said that the UK’s strong recovery would slow slightly over the next few months.
Some economists however are blaming the uncertainty over the conflict in Ukraine as the reason for the weakening in the UK’s and European markets.
As well as that, expectations for rising interest rates
‘It remains too early to gauge the impact of the Ukraine crisis, but the worry is that the combined effects of expected policy tightening, heightened economic uncertainty and sluggish trade could mean manufacturing growth could suddenly weaken more than expected,’ said Rob Dobson, senior economist at Markit.
A sluggish Eurozone economy is also having a negative effect on the UK.
Pound to Euro Exchange Rate Forecast
The GBP/EUR exchange rate could fall further next week as UK data releases are expected to show a softening in the strength of the UK economy.
Service sector PMI data due for release next week is expected to show that backlogs of work in July fell by its fastest pace since May last year. Manufacturing and Industrial production reports are also likely to show falls.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3393 ,
Euro,, Pound Sterling,0.7958 ,
Euro,,Australian Dollar,1.4423 ,
Euro,,Canadian Dollar,1.4647 ,
Pound Sterling,,Euro,1.2563 ,
US Dollar,,Euro,0.7467 ,
[/table]
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