Pound v Euro: Exchange rate flat on UK manufacturing data & Eurozone unemployment fall

IHS Markit Director Rob Dobson said: “The February survey provided mixed signals on the health of the UK manufacturing sector. The PMI’s Output Index fell to its second-lowest level since the EU referendum and, based on its past relationship with official ONS data, is consistent with only a subdued 0.4 per cent quarterly pace of growth in production volumes.”

Mr Dobson also noted that the survey yielded some positive finding, observing; “other survey indicators … are suggesting output growth may revive in the coming months. New orders showed the largest monthly gain since November and are outpacing the rate of growth in output to one of the greatest extents in more than a decade.”

Consumer lending data for January has also been disappointing, with net consumer credit shrinking -£100 million further than forecast to £1.3 billion and net lending secured on dwellings falling to £3.4 billion.

Mortgage approvals fared better than expected, rising from an upwardly-revised 61,700 to 67,500, beating predictions of an uptick to 62,000.

The euro is being kept around opening levels ahead of today’s US data, despite a largely-positive round of manufacturing PMIs for the Eurozone and better-than-expected unemployment rates for the currency bloc during January.

Although the Italian manufacturing index weakened sharply from 59 to 56.8 and the French manufacturing index unexpectedly slipped from 56.1 to 55.9, both the German and Eurozone-wide indices bettered projections.

Eurozone unemployment came in at 8.6 per cent at the start of the year, with the previous month’s rate of joblessness unexpectedly revised down to 8.6 per cent as well – the lowest level seen since December 2008.

Huge variations still remain between the individual Eurozone member states, however; the German unemployment rate is 3.6 per cent, but in Italy the joblessness rate is 11.1 per cent and in Spain it is 16.3 per cent.

The pound could receive some respite later in the day if key US consumer spending data applies downside pressure to the euro.

The US personal consumption expenditure figures are the Federal Reserve’s preferred way of gauging inflation, rather than the consumer price index used by many of the world’s other central banks, so a strong figure here would boost the monetary policy outlook and open the door for GBP/EUR to advance.