The Euro Pound (EUR/GBP) exchange rate is strengthening this morning as markets await the latest interest rate decision from the Bank of England (BoE).
At the time of writing the EUR/GBP pairing are trading at around 0.8663 as German factory orders increase more than expected.
Euro (EUR) Supported by German Factory Orders
The Euro is being supported this morning by the latest factory orders data from Germany for March which rose more than expected.
German factory orders jumped to 3% in March, more than the 1.5% forecast. As reported by Bloomberg:
‘Demand for machinery, data processing equipment, electrical and optical goods as well as car manufacturing was particularly strong, the Economy Ministry said. Helped by strong recoveries abroad, German manufacturing has held up well during the latest rounds of restrictions to limit the spread of the coronavirus.’
However the latest construction PMI from Germany fell back further into contraction territory for April coming in at 46.2, and expectations for activity over the coming year dropped from a 13-month high to the weakest in 2021 so far.
Phil Smith, Economics Associate Director at IHS Markit, commented on the latest PMI saying:
‘Supply bottlenecks are starting to unnerve constructors, leading to a decline in business sentiment about the outlook over fears of forced downtime on-site in the coming months and a threat to demand from sharply rising prices.’
Pound (GBP) Investors Await BoE Interest Rate Decision
The Pound has weakened against the Euro this morning despite a positive services PMI from the UK as markets await the latest BoE interest rate decision.
The latest Services PMI from the UK, has jumped to 61.0 for April, its highest reading since October 2013.
Tim Moore, economics director at IHS Markit, commented on the latest figures saying:
‘The roadmap for reopening leisure, hospitality and other customer-facing activities resulted in a sharp increase in forward bookings and new project starts across the service sector.’
‘If the rebound in order books continues along its recent trajectory during the rest of the second quarter, then service sector output growth looks very likely to surpass the survey-record high seen back in April 1997.’
Investors will be hoping for a more positive tone from the BoE this afternoon, which could see the Pound regain traction against the Euro.
Euro Pound Exchange Rate Outlook: German Industrial Production in Focus
For Euro traders, tomorrow will see the release of the latest German industrial production figures for March.
The figures are forecast to re-enter growth territory at 1.7% as the country began to recover from the coronavirus pandemic.
The latest construction PMI data from the UK could see the Pound head higher tomorrow as the sector continues to grow following the easing of lockdown restrictions across the country.
The EUR/GBP exchange rate will continue to be driven by any further coronavirus updates in the coming days as England prepares for the third stage of lockdown easing in a couple of weeks.