The Euro has received mixed signals following manufacturing and services sector data released yesterday as per the Purchasing Managers Index. Manufacturing in the bloc arrived better than expected with a higher reading although services fell lower with a small decline in the numbers. It would appear that some of those trade war concerns may now be starting to be felt in the data and so any developments from either US President Donald Trump or from the EU on trade could see more volatility for Euro exchange rates. The European Central Bank meet on Thursday and any clues offered by ECB President Mario Draghi as to where the central bank is heading on interest rates could see considerable volatility for the Euro.
Rates for GBP EUR were boosted yesterday after UK Prime Minister Theresa May announced that she would take charge of the Brexit negotiations. The developments would suggest a slightly softer Brexit which the markets are taking as positive so far. After the recent high profile resignations from the cabinet the pound has been on a weaker footing and this is unlikely to change anytime soon. Now that the parliamentary summer recess has started the markets are none the wiser as to where Brexit is heading after a tense couple of weeks in British politics.
Any major developments are likely to happen when parliament returns which takes us to the end of August or early September. Any gains in these coming weeks are likely to be limited in this situation and whilst the risk of a no deal Brexit scenario is still a possibility. As such there is a good opportunity for selling Euros at this time before new developments could change the path for GBP EUR.
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