GBP EUR Dips Despite PMI Data Outpacing Europe

GBP EUR Higher but Euro Still in Charge

The GBP EUR exchange rate was -30% lower on Tuesday despite the latest HIS Markit PMI data, which showed the UK recovery still outpacing Europe. The PMI data was better than analysts had anticipated. The UK is also set to join China and the US in a bid to lower oil prices.

The GBP to EUR is trading just below 1.1900 at 1.1890 after recent strength.

PMI data comes in better for UK and Europe

The latest HIS Markit PMI business activity data was better than analysts had expected for Europe, Germany, and the UK.

The UK economy is doing notably better than Europe as the economic rebound stutters in recent months.

The UK reading of 57.7 was higher than the 55.8 seen in the eurozone and the 52.8 in Germany.

Chris Williamson at IHS Markit said: “A combination of sustained buoyant business growth, further job market gains and record inflationary pressures gives a green light for interest rates to rise in December.”

Of Europe, Williamson said: “A stronger expansion of business activity in November defied economists’ expectations of a slowdown but is unlikely to prevent the eurozone from suffering slower growth in the fourth quarter, especially as rising virus cases look set to cause renewed disruptions to the economy in December.”

The latest data will also not include the fact that European countries are heading back to further pandemic restrictions, led by Austria, Germany, and the Netherlands. The Bank of England is seen increasing rates in December after a stronger employment performance and overheating inflation, but the bank is not giving any clues in the recent comments by policymakers.

Nations forge a plan to bring down oil prices

The UK is one of a number of nations seeking to take some of the sting out of oil prices after a recent move above $80 per barrel.

The United States confirmed on Tuesday that 50 million barrels of crude will be released from its Strategic Petroleum Reserve (SPR), which was created in 1975 following the last oil shock.

The White House had already approved the sale of 18 million barrels with the other 32 million coming over the next months. A White House announcement said: “American consumers are feeling the impact of elevated gas prices at the pump and in their heating bills and American businesses are, too, because oil supply has not kept up with demand as the global economy emerges from the pandemic.”

China, India, Japan, and the UK have also released similar supplies, which has already helped to cool oil prices.

The figure for the UK could be around 1.5 million barrels, while China has been releasing reserves from its own SPR since the spring. China has built up a reserve of 200 million barrels and a large supply was added during the pandemic oil crash when prices were in single digits.

The coordinated move by the nations is an attempt to cool inflation and economic pressures.

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