Weaker than expected data released yesterday did little to inspire Eurozone investors. The IHS Markit’s Composite Purchasing Manager’s Index, which is considered a good overall picture of health for the region, only nudged up 0.1 to 51.6 this month, from 51.5 the previous month but below analysts’ forecasts.
|Currency Pair||% Change (Week)||Difference on £200,000|
Investment bank Morgan Stanley added to the worries of investors by stating the outlook for future growth within the region also carries downside risks. The main risk to the Eurozone economy remains the manufacturing sector across the bloc, which has been in general decline in recent months and isn’t showing any signs of picking up. To top it all off, German business morale deteriorated more than expected according to the Business IFO report yesterday, due to the loss in confidence of the German service sector in what was a gloomy day for the bloc.
If yesterday’s data wasn’t enough to worry investors, then the European Central Bank’s minutes from the April 10th meeting put any doubt to rest, confirming that the Eurozone recovery isn’t quite going to plan. Whilst they are not prepared to act yet, the ECB have acknowledged that it requires more analysis of data in the months to come, but are more than likely going to give banks extremely generous terms on cheap loans. This is to ensure that credit continues to flow within the economy.
With little data out today, the GBP/EUR rate will remain at the mercy of political updates from the UK with regards to Brexit and developments regarding the US China trade war, both of which have been cited as reasons to why the bloc’s growth has been so subdued of late.
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