The GBP to Euro exchange rate fell on Tuesday after data showed that manufacturing activity in the UK expanded at its slowest rate in 8-months in March, harming optimism over the state of the nation’s economic recovery.
According to the Markit created report the UK manufacturing PMI fell to a seasonally adjusted figure of 55.3 in March, down from the 56.2 seen in February. The figure disappointed economists who had been expecting a rise to 56.7. The report also showed that export demand weakened to its worst level in 10 months.
“The old criticisms still apply, with the survey signalling a downturn in export growth and an expansion that is all-too reliant on domestic consumers. However, the very fact that we have a healthy manufacturing economy that is generating jobs at a rate rarely seen in recent decades suggests that the rebalancing process is underway. We may be still a consumption-oriented economy in many respects, but at least we now appear to be producing more of the goods we sell ourselves, which is a more sustainable situation to be in,” said Markits Rob Dobson.
The Euro was able to take advantage of the disappointing data and pushed higher against the Pound. According to data released in the 18 member Eurozone the regions recovery seems to be becoming more balanced as France, Spain and Italy all saw positive gains in manufacturing activity. Germany eased however.
A separate report showed that unemployment in the Eurozone eased slightly in February. According to Eurostat the unemployment rate softened to 11.9% meaning that 18.97 million people across the region are out of work.
Unemployment eased slightly in Spain but the jobless rate remains disturbingly high at 25.8%. France, Italy and the Netherlands all recorded rises in unemployment. The data suggests that the continuingly high jobless rate remains a major issue and that the so called economic recovery has not had much of an impact on job creation.
The Euro is likely to experience further volatility on Wednesday due to the publication of the latest GDP and PPI data.
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3797 ,
Euro,, Pound Sterling,0.8283 ,
Euro,,Australian Dollar,1.4876 ,
Euro,,Canadian Dollar,1.5270 ,
Pound Sterling,,Euro,1.2075 ,
Pound Sterling,,US Dollar,1.6648 ,
Pound Sterling,,Australian Dollar,1.7963 ,
Pound Sterling,,Canadian Dollar,1.8414 ,
[/table]
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