The Pound Sterling to Euro (GBP/EUR) exchange rate was trading steadily on Monday as manufacturing PMI data out of the UK weighed on the UK currency and fears over a Greek default weighed on the single currency. The Pound Sterling to US Dollar (GBP/USD) exchange fell to a 3-week low following the PMI’s release.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.3918
Worries over a Greek default heightened as no deal was reached between Athens and its European creditors over the weekend. The Greek government had been hinting last week that Sunday would lead to a breakthrough. It did not and now the nation has until Friday to repay €300 million to the International Monetary Fund (IMF) or default.
‘It’s becoming increasingly unlikely that Greece will be able to get the funding without some kind of political disruption along the way. The news over the weekend was consistent with that and the impact on the currency is also consistent with that view as well,’ said a currency strategist from Barclays Bank.
Further losses for the Euro were restrained as economic data showed that manufacturing activity across the Eurozone increased modestly in May. The Eurozone manufacturing PMI came in at 52.2 in May, an improvement on April’s figure of 52.0. Economists had been expecting a rise to 52.3. Manufacturing activity in Spain and Italy surged whilst activity in France contracted and Germany saw slight growth.
‘The rate of growth is modest rather than spectacular, however, and there are clearly countries which continue to struggle. Weakness is centred in the region’s core, with France’s manufacturing sector still in decline and Germany only seeing meagre growth,’ said Markit’s chief economist Chris Williamson.
The Pound Sterling to US Dollar (GBP/USD) exchange rate fell to a session low of 1.5194
The Pound weakened to a three-week low against the US Dollar as data released by Markit showed that manufacturing activity in the UK expanded at a slower pace last month.
The Markit U.K. manufacturing purchasing managers’ index rose to 52.0 in May from a downwardly revised 51.8 in April, but came in below forecasts of 52.5.
The currency was also under pressure from expectations that other PMI reports released later in the week will also come in softer than expectations.
The US Dollar meanwhile found support from expectations that this week’s wealth of US data releases will come in positively.
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