Pound sterling has failed to rise against the euro this morning, Friday 5 January.
The GBP currency converts to €1.239, according to Bloomberg figures at 7:25 this morning.
It remains at the same value it was at the same time yesterday.
The stable figure comes in spite of yesterday’s above-forecast UK services PMI, which showed better than expected growth in the services sector.
Laura Parsons, currency analyst at Torfx, said the surprise lack of movement could be thanks to an environment of “uncertainty”.
“The pound fell against the euro on Thursday despite an impressive UK services PMI from Markit.
“The gauge of services sector output climbed from 53.8 to 54.2, beating forecasts for a reading of 54.
“While this data indicated that the sector that makes the most significant contribution to UK growth ended 2017 on a high, the report did stress that cost pressures are persisting and that the resilience of the economy will be increasingly tested by prevailing uncertainty and anxiety about the future.’
“Sterling accordingly struggled to hold its own against currencies like the euro, and GBP/EUR hit a low of €1.120.
Laura added a consumer price report from the Eurozone could see further pound growth.
“However, Sterling could bounce back against the common currency later today if the Eurozone’s consumer price index shows the decline in inflation forecast by economists.
“Falling consumer price pressures are likely to keep the European Central Bank (ECB) downbeat on tightening monetary policy in the months ahead, so a dip in inflation from 1.5% to 1.4% would be euro-negative.”
Yesterday, Laura attributed the pound’s lowered value to a below-forecast UK construction PMI.
“An underperforming manufacturing PMI on Tuesday raised concerns that UK economic output slowed at the end of the year.”
She had hoped “a rising services index would be pound-supportive”.
It would appear lingering economic uncertainty limited the effect the services data might have on the pound – although today’s Eurozone report may still serve to boost the GBP currency.
