The euro remained range-bound against the pound following the release of weak economic data from both the UK and Europe. While the Eurozone manufacturing PMI hit a 36-month low in May, the UK’s manufacturing PMI hit a five-month low in the same period. Overall, the EUR/GBP pair remained range-bound between 0.8690 and 0.8720 in the past 24 hours.
The Hamburg Commercial Bank (HCOB) and S&P Global German flash manufacturing PMI (purchasing manufacturing index) declined to a 36-month low of 42.90 in May from 44.50 in April and missed forecasts of 44.90. A reading below 50 indicates contraction, and vice versa.
Also, the German flash production index fell to a six-month low of 47.40 in May from 50.70 in the previous month.
The S&P Global German Flash Services PMI increased to a 21-month high of 57.80 in May from 56 in April and pleased the market, which was expecting a decline in the services PMI to 55.
Overall, the HCOB and S&P Global German flash composite PMI inched up to 54.30 in May from 54.20 in the prior month.
The HCOB and S&P Global Eurozone flash manufacturing PMI declined to a 36-month low of 44.60 in May from 45.80 in April and missed forecasts of 46.20.
Furthermore, the Eurozone flash production index fell to a six-month low of 46.30 in May from 48.50 in April.
The S&P Global Flash Eurozone Services PMI decreased to a two-month low of 55.90 in May from 56.20 in April but surpassed forecasts of 55.40. Overall, the HCOB and S&P Global Eurozone flash composite PMI hit a three-month low of 53.30 in May, down from 54.10 in the prior month.
The S&P Global / CIPS UK flash manufacturing PMI inched down to a five-month low of 46.90 in May from 47.80 in April and disappointed economists who were expecting a rise in the flash manufacturing PMI to 47.90.
Furthermore, the UK flash manufacturing output index fell to a four-month low of 47.40 in May from 49.30 in the previous month.
The S&P Global / CIPS UK flash services PMI inched lower to a two-month low of 55.10 in May from 55.90 in April and a few notches lower than the forecast of 55.50.
Overall, the UK flash composite PMI output index hit a two-month low of 53.90 in May after a 12-month high of 54.90 in the earlier month.
Fresh work spanning the private sector economy rose at the slowest rate since February. However, private sector employment grew for the second successive month in May, even though the pace of job creation was only minimal and considerably weaker than recorded on average last year. This paved the way for the steepest decline in backlogs of work since January. Looking ahead, business sentiment among service providers and manufacturers weakened slightly in comparison to April.
The weak economic data from both Europe and the UK is expected to keep the EUR/GBP pair range bound in the short term.
The historical price chart indicates that the EUR/GBP pair is ascending after testing support at 0.8670. The next resistance is anticipated only near 0.8770. Additionally, the currency pair is trading above its 50-day moving average while the MACD indicator is showing a positive reading. Therefore, we anticipate the EUR/GBP pair to remain in an uptrend in the days ahead.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
