17-month lows: Euro reaches fresh troughs against British Pound following Eurozone and UK PMIs

• 0.8360 is in sight as EUR/GBP extends its slide. The pair is heading for a nearly 3% loss over a 4-week sell-off.
• Strong October UK PMI readings provide further evidence of the economy’s resilience.
• Renewed contraction in France in October accompanies a moderate slowdown in Eurozone PMIs.

EUR/GBP has hit a fresh 17-month low near 0.8360. A fourth consecutive weekly decline would leave the pair down nearly 3% over four weeks. On Friday, the Euro (EUR) remains under pressure against a strong British Pound (GBP). UK business activity figures have reinforced the case for a Bank of England (BoE) interest rate hike in November, while Eurozone releases have heightened concerns over France.

October brought faster growth in UK business activity, according to the S&P Global Flash Purchasing Managers Index. Rather than slipping to the expected 51.8, the Manufacturing PMI climbed from September’s 51.9 to 52.8. The Services PMI gained one whole point to reach 53.1, also defying market expectations of a fall to 51.8.

Assessing the outlook, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated that “the promising economic picture from the latest PMIs should provide an encouraging base for further robust economic growth through the winter months, barring any adverse surprises to businesses in the tax and spending review.”

Eurozone business growth moderates

France’s renewed contraction weighed on Eurozone private sector growth in October, preliminary business activity figures showed. The French downturn followed September’s first expansion in 10 months. Germany and the rest of the region, taken together, continued to expand, but at a reduced pace.

At 52.4, the Eurozone’s HCOB Manufacturing PMI was down from 52.9 in September and short of the market forecast of 52.8. The Services PMI fell from the previous month’s 53 to 51.7, likewise missing expectations of 52.8. 

Germany’s figures presented a mixed picture. An increase in the HCOB Manufacturing PMI to 54.2 from September’s 53.9 contrasted with a slowdown in Services activity, where the reading slipped to 51.7 from 53 a month earlier.