The Euro (EUR) weakened against the Pound (GBP) on Tuesday after a stronger-than-forecast Services Purchasing Managers Index (PMI) lent support to the UK currency and as the Euro was softened by softer-than-expected data.
Concerns over a recovery in the Eurozone were renewed after a report showed that Eurozone services expanded at a slower pace than forecast in July.
According to Markit’s services PMI the Index increased from the 52.8 figure recorded in June to 54.2 in July.
Economists had been calling for a figure of 54.4.
A composite index which combines services and manufacturing activity increased to 53.8, below forecasts for a number of 54.0.
The month on month increase was a result of improved business in Spain and Germany. France however once again disappointed to once again highlight the economic difficulties facing the Eurozone’s second largest economy.
The country-by-country picture underscores the weakness in France; on this Markit scale anything less than 50 means the economy is shrinking.
‘The survey suggests that Eurozone GDP is growing at a quarterly rate of 0.4%, but the worry is that this is still only generating very modest job creation. There’s also a great deal of uncertainty as to which direction the pace of growth will take in the coming months,’ said Markit’s chief economist Chris Williamson.
Pound Sterling to Euro (GBP/EUR) Exchange Rate
Also weighing upon the Euro is the upcoming European Central Bank policy meeting. Economists are expecting policy makers to introduce new monetary easing measures in order to tackle the threat of deflation. The ECB meeting takes place on Thursday.
Sterling meanwhile advanced strongly against the Euro and Canadian Dollar after a report showed that Britain’s service industry increased at its fastest pace in eight-months.
The Markit/CIPS services purchasing managers’ index (PMI) rose to an eight-month high of 59.1 in July from June’s reading of 57.7, beating the average forecast of 57.9.
The report also showed record employment growth which led some economists to predict that the UK’s unemployment rate will fall below 6% before the end of the year.
Current Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.3404,
Euro,, Pound Sterling,0.7937 ,
Euro,,Australian Dollar,1.4350 ,
Euro,,Canadian Dollar,1.4647 ,
Pound Sterling,,Euro,1.2600 ,
US Dollar,,Euro,0.7460 ,
[/table]
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