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Pound to Euro Exchange Rate Rises after UK Minor UK Manufacturing Sector Growth

Published: 3 Apr at 5 PM Tags: Pound Sterling, Euro Exchange Rate, Currency Exchange, Euro Crisis, UK, Exchange Rates, Inflation, Pound Euro Exchaneg Rate,

Forecast-Beating Rise in UK Manufacturing PMI Boosts GBP/EUR Exchange Rate

A better-than-expected result for the UK’s March manufacturing PMI has raised demand for the Pound today, although Sterling has struggled in other pairings.

The day’s positive UK news has been that the manufacturing PMI for March has shown growth, from 55 points to 55.1.

While tepid, this result has still beaten estimates for a slowdown to 54.7 points. Considering the future of the UK manufacturing sector, IHS Markit’s Chris Williamson said;

‘The key question is whether growth can now be sustained, albeit at a lower level, into the coming months. On that front the news is generally positive.

Manufacturers are still reporting solid inflows of new work from domestic and overseas markets. Business optimism is holding steady at an elevated level, with over 54% of companies expecting output to expand over the coming 12 months.

With cost inflationary pressures also moderating to provide some respite for margins, the sector looks set to make further slow and steady progress as we head through the spring’.

The rest of the UK PMIs out this week may not prove so supportive to the Pound, as the construction and services readings out on 4th and 5th April are both forecast to show a slowdown in March.

Euro to Pound Exchange Rate Slip Triggered by Disappointing Eurozone Manufacturing Decline

While UK manufacturing data has been tentatively positive today, the latest Eurozone manufacturing PMI readings have printed poorly, dragging the Euro’s value down.

The finalised Eurozone manufacturing PMIs for March have declined across the board, indicating slowing levels of growth across the single currency bloc.

Giving a balanced take on the data, Chris Williamson of IHS Markit said;

‘The overall pace of growth nevertheless remains robust by historical standards, with decent PMI readings seen in all countries, including Greece, to indicate a steady, broad-based expansion.

Manufacturing should therefore make another substantial contribution to GDP growth in the first quarter, and the presence of sustained inflationary pressures will be welcomed by policymakers’.

Euro traders seemingly ignored this room for potential growth, given the poor EUR/GBP exchange rate movement seen today.

The situation could change dramatically on 4th April, when a trio of high-impact, positively-predicted Eurozone data releases are due.

These will cover inflation and unemployment in the single currency bloc – current estimates are for a drop in the jobless rate along with higher inflation rates in March.

Such results could see confidence in the Euro return rapidly, resulting in a clear EUR/GBP exchange rate rise.