The Euro (EUR) is facing challenges against a robust British Pound (GBP) on Friday. This situation comes as the UK’s business activity data supports the possibility of an interest rate hike by the Bank of England (BoE) in November. Concurrently, concerns are mounting regarding the Eurozone, primarily due to emerging issues in France. The EUR/GBP exchange rate has hit a new 17-month low around 0.8360, indicating a nearly 3% decline during a four-week downturn.
In October, business activity in the UK showed signs of increased momentum, according to the S&P Global Flash Purchasing Managers Index. The Manufacturing PMI rose to 52.8 from September’s 51.9, surpassing predictions that had anticipated a slight dip to 51.8. Similarly, the Services PMI surged by a full point to 53.1, contrary to expectations that it would fall to 51.8.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, noted that “the encouraging economic outlook reflected in the latest PMIs should lay a strong foundation for continued economic growth through the winter months, provided businesses don’t face any unexpected setbacks related to tax and spending reviews.”
Signs of a Slowing Eurozone Economy
Meanwhile, the Eurozone’s preliminary business activity data for October indicated a subdued growth in the private sector, largely due to negative developments in France. This came after France recorded its first increase in ten months in September. Nevertheless, Germany and other parts of the region continued to expand, though at a slower rate.
The HCOB Manufacturing PMI for the Eurozone decreased to 52.4 from 52.9 last month, falling below the market’s expectation of 52.8. Additionally, the Services PMI dropped to 51.7 from 53, also underperforming the anticipated 52.8.
Germany’s data has been mixed; while the HCOB Manufacturing PMI improved to 54.2 from 53.9 in September, the Services sector saw a decline, with its PMI falling to 51.7 from 53 during the same period.
