Pound Euro Exchange Rate (GBP EUR) Heads Lower Following Dire UK PMI Services Data

Modified: Friday, 4 January 2013 14:28 BST - Written by Ben Hughes

STORY LINK Pound Euro Exchange Rate (GBP EUR) Heads Lower Following Dire UK PMI Services Data

This morning’s session started on a duff note for the euro following the release of a disappointing set of Purchasing Manager Index surveys for the whole of eurozone and for Europe’s primary economic power – Germany.

The Teutonic PMI survey for the services sector was a particular blow for the single currency, showing a dip in activity in this key sector of the German economy last month, in comparison to November. The whole of eurozone Composite PMI, which combines results across all sectors, showed a similarly unexpected dip in December. The market’s instant reaction to these numbers saw institutional investors shift out of euro-denominated assets, sending the Pound Euro exchange rate (currency : GBP EUR) up as high as 1.2347 earlier this morning.

However, the gains for GBP EUR may prove ephemeral, following the release a few minutes ago, of a highly disappointing UK PMI Services sector survey which showed a shock contraction in activity in Britain’s tertiary industries last month. The UK’s service industries had grown in November and the figure was expected to show that the expansion had continued last month, so this morning’s release is likely to weigh heavily on the Pound into next week’s session.

Elsewhere, today’s main event in the currency markets comes in the form of this afternoon’s Non-Farm Payrolls release in the US. The GBP USD exchange rate (currency : GBP USD) has tumbled from the 16-month high which it reached earlier this week and currently sits in the 1.6000 – 1.6100 range. If the NFP data shows that less than the anticipated 145,000 were generated in the world’s leading economy last month, then there could be further short-term downside for GBP USD.

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