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Euro rises against GBP but struggles against majority of peers

August 5, 2024
Euro rises against GBP but struggles against majority of peers

The Euro faced pressure on Monday due to its strong negative correlation with a rising US Dollar and caution from EUR investors ahead of upcoming high-impact Eurozone data.

The common currency gained on Tuesday after Eurozone GDP for the second quarter exceeded forecasts, coming in at 0.3% instead of the expected 0.2%. However, the EUR's upside was limited.

An unexpected rise in Eurozone inflation further boosted the EUR on Wednesday. The surprise increase in price pressures was viewed as reducing the likelihood of another interest rate cut from the European Central Bank next month.

An unexpected rise in Eurozone unemployment exerted some pressure on the Euro towards the end of the week. Nonetheless, the EUR still achieved significant gains against the weakening Pound.

The release of Eurozone PMI results on Monday morning is expected to set the tone for the Euro throughout the week.

The Eurozone services PMI is expected to indicate a slowdown in the sector, with the score predicted to drop from 52.8 to 51.9. Meanwhile, the UK's finalized results are anticipated to confirm an acceleration in activity within the British services sector, with the PMI score projected to rise from 52.1 to 52.4.

Manufacturing data from Germany could also influence the EUR. Both factory orders and industrial production are forecasted to have rebounded in the Eurozone’s largest economy in June. If the data meets these forecasts, the EUR could strengthen.

Eurozone retail sales could also affect the Euro. Analysts expect sales growth in the bloc to have accelerated in June, which could provide additional support for the EUR.

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