Manufacturing and service data holds the headlines - Euro currency news daily
Daily Currency Update
Tuesday was quite eventful in terms of economic data releases. The PMI reports from the UK and Europe indicated an expansion in services, peering over the 50.00 gauge but manufacturing showed a contraction.In the US, both service and manufacturing data disappointed against previous and forecasted figures. A fall back below 50.0 was seen for manufacturing which was the first contraction announcement since December 2023. Services came in at 50.9 but as the first fall below 51.0 since November 2023. This showed that the US business activity expanded in April at the slowest pace this year and has led to the first decline in employment since 2020.
Alongside the heavy-weighted data for FX volatility, US new home sales were also released and showed a surge in March despite elevated mortgage rates. The economic data from the US likely fueled speculation that the Federal Reserve may need to implement interest rate cuts sooner than previously anticipated. This anticipation of looser monetary policy tends to weaken the US dollar as investors adjust their positions. As a result, we saw significant movements in currency pairs. GBP/USD jumped to 1.2460 on the news, after trading around 1.2325 at the start of Tuesday. EUR/USD similarly picked up, breaking through 1.0700 after trading as low as 1.0640 in the morning. GBP/EUR saw gains also but in a much narrower range than that seen with the USD. The manufacturing and service PMI data seemed to favor the GBP over the EUR.
Key Movers
It seems like a relatively quiet day for macroeconomic data, but there have been notable developments, especially in Australia and Germany. The Australian Consumer Price Index (CPI) figures exceeded forecasts, with a rise of 1.0% over the quarter and a 3.6% increase over the twelve months to March. This was primarily driven by gains in rent, education, and medical services. While the annual inflation rate is within the Reserve Bank of Australia's target range of 2-3%, the easing trend suggests that early interest rate cuts are not imminent. The Australian dollar reacted modestly to the news, showing slight gains against both the GBP and USD but remaining within a narrow range. GBP/AUD traded within 1.9100-1.9200, and AUD/USD climbed back above 0.6500.
In Germany, the IFO Business Climate data is scheduled for release today. This indicator provides insight into the sentiment of German businesses and can influence market sentiment toward the euro.
Expected Ranges
GBP/USD: 1.2370 – 1.2480 
GBP/EUR: 1.1590 – 1.1670
EUR/USD: 1.0640 – 1.0780
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