On Thursday, during European trading, the euro (EUR) was seen moving cautiously against the British pound (GBP), hovering around 0.8650. Investors appear to be waiting for the preliminary results of the Eurozone and UK Private Sector Purchasing Managers’ Index (PMI) for May, leading to a somewhat passive market.
The euro area’s HCOB composite PMI is anticipated to contract again, settling at about 48.8. This value indicates a decrease in business activity since anything below 50.0 signifies a decline. The manufacturing PMI is expected to see modest growth, projected at 51.9, down from 52.2 previously. Meanwhile, the services PMI is likely to shrink again, albeit at a slower rate, with expectations around 47.7.
If the Eurozone PMI data shows further weakness, it could diminish the euro’s appeal. On the monetary policy side, investors are keen to gather insights about potential changes from the European Central Bank (ECB) regarding interest rates in June, especially as inflationary pressures rise, partly due to increasing oil prices.
Recently, ECB policymaker and Belgian central bank governor Pierre Wunsch mentioned the need for the central bank to take action, stating, “we are at the beginning of an inflation problem.”
In the UK, the S&P Global composite PMI is predicted to dip to 51.7 from April’s 52.6, influenced by slower growth in both the manufacturing and services sectors. Although the UK services PMI is expected to expand again, the projected rate is slower, sitting at 51.8 compared to the previous 52.7.
