Pound Euro Exchange Rate Today: GBP EUR Gains On UK PMI Service Survey

Modified: Monday, 5 August 2013 16:04 BST - Written by John Cameron

STORY LINK Pound Euro Exchange Rate Today: GBP EUR Gains On UK PMI Service Survey

The Pound Euro exchange rate (GBP/EUR) has made healthy gains today, and is trading 0.51% higher on the day at 1.15727 GBPEUR. Fore reference, the Euro to Pound exchange rate is trading at 0.86415 EUR/GBP.

There was good news and bad for the Pound Sterling today. A highly encouraging UK data set led the way with this month’s edition of the Purchasing Manager Index survey of the all-important services sector of the British economy thrashing analysts’ expectations of a 57.4 print to show at 60.2. This was the strongest level of growth for the combined tertiary industries survey since the final quarter of December 2006, providing real hope that the UK economy is now well on the way to healing.

However, on a negative note, the University of Colombia’s Professor Michael Woodward has raised serious question marks regarding the wisdom of the Bank of England’s current policy stance which has as its central plank the use of ‘forward guidance’ statements. Woodward warned that the missives, which are aimed at convincing economic participants that interest rates are set to remain at a low level for a prolonged period of time, may cause domestic inflation to spiral. The danger is that, if price rises appear to be feeding off their own momentum, then the BoE will be forced to raise interest rates in an effort to cool inflation – a move which would serve to subdue UK economic activity.

Investors have set Professor Woodward’s words to one side today in order to concentrate on the stellar UK PMI Services data. The upshot has seen the Pound to Euro exchange rate register healthy gains – the pair struck an intraday high of 1.1577 GBP/EUR shortly after the data was released. The Pound Sterling has recorded gains of a similar magnitude sending the Pound Dollar exchange rate (currency : GBP USD) up to close to 1.5400 earlier.

However, the Pound’s gains are by no means guaranteed to stick as we head into the middle part of the week; analysts are anticipating that Wednesday’s Bank of England inflation report may once again talk down the Pound in an effort to boost activity levels in the UK’s manufacturing sectors.

To compare other exchange rates, or to get a Pound Euro exchange rate forecast, please refer to the main Currency News UK website.

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