Euro, Sterling under pressure after mixed Eurozone, UK PMI

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The EURGBP cross pared its daily gains, trading lower around 0.8620 on Tuesday, following mixed Purchasing Managers Index (PMI) figures from the United Kingdom and the Eurozone.

The preliminary S&P Global/CIPS UK Manufacturing PMI declined to 48.7 against expectations of remaining constant at the reading of 50.3 in April, while the Services PMI increased to 54.9 against the expected reading of 53.0 and 53.1 prior. Composite PMI increased to 54.0 from the previous reading of 52.8.

In April, the preliminary Eurozone Manufacturing PMI fell to 45.6, disappointing against the anticipated improvement to 46.5 from the previous 46.1. However, the Services PMI showed strength, reaching 52.9 compared to the estimated 51.8 and the prior 51.5.

The Composite PMI for April exhibited an improved reading of 51.4, surpassing both the previous 50.3 and the expected 50.8.

Following the release of mixed German PMI data, the Euro gained ground.

April’s preliminary German Manufacturing PMI climbed to 42.2, slightly below the expected 42.8, but up from 41.9 in March, marking a two-month high.

Services PMI also saw a notable improvement, reaching 53.3, surpassing the market’s expectation of 50.6 and hitting a fresh ten-month high. The Composite Output Index for April stood at 50.5, exceeding both the expected 48.6 and March’s 47.7, also reaching a ten-month high.

According to Reuters, European Central Bank Vice President Luis de Guindos stated in a newspaper interview that the ECB plans to lower interest rates in June.

However, he stressed the necessity of prudence regarding future actions and the importance of considering signals from the US Federal Reserve.

On the United Kingdom’s side, interest rate futures indicate full pricing for a quarter-point rate cut by the Bank of England in August, with expectations of two rate cuts by the end of the year.

This increasing speculation about rate cuts by the BoE is putting downward pressure on the Pound Sterling.

(Source: OANDA)