Euro Struggles vs Pound Despite Strong Eurozone PMIs

Key Moments

Euro Underperforms Against Pound Near Monthly Lows

The Euro (EUR) is losing ground against the British Pound (GBP) on Tuesday, with EUR/GBP stepping back from session highs at 0.8635. The cross remains pinned near monthly troughs around the 0.8620 area after sliding nearly 0.6% over the last two sessions. This pullback comes even as Eurozone HCOB Purchasing Managers Index (PMI) data for June modestly outperforms market forecasts and follows the resignation of UK Prime Minister, Sir Keir Starmer.

Eurozone PMIs Show Mixed but Slightly Better-Than-Expected Momentum

Preliminary Eurozone PMI figures for June indicate a moderate improvement in overall business activity. Manufacturing PMI eased to 51.3 from 51.6 in May but still came in marginally above the 51.2 consensus. In contrast, the services sector showed a more notable pickup, with the Services PMI rising to 48.9 from 47.7, beating expectations of a 48.1 reading. As a result, the Composite PMI advanced by one full point to 49.5 from 48.5, surpassing the forecast of 49.1.

Despite these slightly better-than-expected regional readings, EUR/GBP has been unable to break convincingly above 0.8635, leaving the pair hovering just above its recent lows.

Softer German PMIs Weigh on the Euro

Earlier in the day, PMI data from Germany came in weaker, adding pressure on the common currency. German Manufacturing PMI for June was unchanged at 50, compared with 50.1 in the previous month. The services sector showed a more pronounced setback, with Services PMI slipping to 46.8 from 48.1 in May, contrary to expectations for a mild improvement to 48.7.

The Euro edged lower following the German releases, as the softer national readings partially offset the broader Eurozone uptick and dampened sentiment toward the currency.

UK PMI Expectations and Political Backdrop Support Sterling

In the United Kingdom, market participants are awaiting the release of preliminary June PMIs from S&P Global in a few minutes. Services activity is anticipated to move up to 50 from 49.3 in May, while manufacturing output is expected to slow to 53.6 in June from 53.9 in May.

Beyond the data outlook, the Pound has remained relatively stable in the wake of Prime Minister Keir Starmer’s resignation. Investors appear comfortable with the prospects of a smooth transition of power. Manchester Mayor Andrew Burnham has emerged as the apparent front-runner, while Labour Party figures are positioning themselves for roles in the next cabinet.

Eurozone PMI Details

Below are the latest published details for the Eurozone HCOB PMIs, as released by S&P Global and Hamburg Commercial Bank (HCOB).