The euro is making up for losses against the British pound despite moderately positive PMI data for the euro zone

The euro (EUR) is paring previous gains against the British pound (GBP) on Tuesday. The EUR/GBP pair has lost almost 0.6% in the last two days and remains below 0.8635, unable to break out from just above monthly lows despite higher-than-expected HCOB Purchasing Managers Index (PMI) data and the resignation of UK Prime Minister Sir Keir Starmer.

Flash PMI data for the euro zone for June showed manufacturing activity slowed to 51.3 from 51.6 in May, but slightly above the expected 51.2, while business activity in the services sector improved to 48.9 from 47.7, beating expectations of 48.1. The Composite PMI rose a full point to 49.5 from 48.5, also above the market consensus of 49.1.

However, data from Germany released earlier in the day were slightly milder, which put some negative pressure on the euro. The German manufacturing PMI stuck at 50 in June, following a reading of 50.1 in the previous month, while activity in services fell at a rate of 46.8 from 48.1 in May, amid market expectations for a slight improvement to 48.7. After the data was published, the euro lost value.

In the UK, in a few minutes S&P Global will publish preliminary PMI indexes for June. Activity in services will boost to 50 from 49.3 in May, while the manufacturing sector is expected to ponderous to 53.6 in June from 53.9 in May.

Moreover, the pound remains relatively stable after the resignation of British Prime Minister Keir Starmer. Investors appear tranquil about the prospect of an tidy transition of power, with Manchester Mayor Andrew Burnham emerging as the best-placed candidate and Labor leaders racing to join the next cabinet.

Economic indicator

HCOB PMI Production

Manufacturing Purchasing Managers’ Index (PMI), published monthly by S&P Global and Hamburg Commercial Bank (HCOB)is the leading indicator measuring economic activity in the euro area’s manufacturing sector. The data comes from surveys conducted among senior executives in private sector companies in the manufacturing sector. Survey responses reflect possible changes in the current month compared to the previous month and can predict changing trends in official data series such as gross domestic product (GDP), industrial production, employment and inflation. The index ranges from 0 to 100, and a level of 50.0 means no change compared to the previous month. A reading above 50 indicates that the manufacturing economy is broadly expanding, which is a bullish signal for the euro (EUR). Meanwhile, a reading below 50 signals that activity among commodity producers is generally dwindling, which is seen as bearish for the EUR.

Economic indicator

HCOB Services PMI

The Services Purchasing Managers’ Index (PMI), published monthly by S&P Global and Hamburg Commercial Bank (HCOB)is the leading indicator measuring business activity in the euro area services sector. Because the services sector dominates much of the economy, the Services PMI is an vital indicator for gauging the state of overall economic conditions. The data comes from surveys conducted among senior management in private sector companies in the service sector. Survey responses reflect possible changes in the current month compared to the previous month and can predict changing trends in official data series such as gross domestic product (GDP), industrial production, employment and inflation. The index ranges from 0 to 100, and a level of 50.0 means no change compared to the previous month. A reading above 50 indicates that the service economy is growing overall, which is a bullish sign for the euro (EUR). Meanwhile, a reading below 50 signals that activity among service providers is generally dwindling, which is seen as bearish for the EUR.