The EUR v GBP has slumped from 0.87 in April to 0.84 and is at risk of further losses with a weak bounce. The support level below is the 0.8323 figure.
Thursday’s data starts at 3:30pm HKT with the release of PMI figures for Germany. A move from 48.4 to 48.9 is expected in manufacturing, with a 0.5 increase expected in services.
The same figures are released for the wider eurozone at 4pm, with gains expected in manufacturing. That will be followed by the UK data at 4:30pm, where a larger jump is expected in its PMI figures. That could show underlying strength in the UK economy and add to recent euro losses.
The UK has recently been in talks with the eurozone on a Brexit reset deal. According to reports, the UK will be granted access to the EU’s £150 billion defence procurement scheme, while checks on food and agricultural equipment at the border are in line for a substantial reduction.
Critics are calling it a ‘surrender deal,’ but financial analysis from Frontier Economics, who assessed how closer ties benefit the domestic economy earlier this year, say that the deal could be worth up to £25 billion annually for the UK.
Britain’s economy is expected to grow a little faster this year after a Reuters poll of economists, who see unexpectedly strong growth in the first quarter continuing. Sentiment has improved with the EU deal and a basic trade deal with the United States, which still leaves a 10% tariff on British goods but lowers duties on cars and steel.
“The UK government is massively increasing spending this year. There’s a lot of money coming in and that’s going to act as a bit of a tailwind as well. Real wage growth is also still quite strong, so the economy still has some reasonable underpinnings”, said James Smith, economist at ING.
The UK economy seems to have more positive near-term sentiment than its European counterpart and that can boost the British pound, with PMI figures giving a chance to add further gains.
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