GBP/EUR rate soars due to service sector growth
New data has revealed the pound has gained against the euro as Britain’s service sector beats forecasts.
Sterling is up by around 0.25% against the euro. This comes after the Services Purchasing Managers Index revealed the UK’s service sector experienced a three-month high in March. The pound was also up 0.29% ($1.2477) against the dollar on the currency markets.
Analysts were taken aback by the reading of 55.0 after only expecting a reading of 53.5. Any reading above 50 would indicate growth. Experts however, were still not optimistic with their forecasts. The current exchange rate, as a result of this growth, is 1.16948 euros to the pound.
Economy powers through EU split concerns
Despite concerns from experts that triggering Article 50 would affect the pound’s strength, it now seems to be recovering well after previous drops.
Currency analyst Jake Trask, said: “Those worrying about jitters in the services sector with the triggering of Article 50 will have been encouraged by March’s upbeat Services PMI, which beat forecasts by some distance.”
Trask also added that the resulting 55.0 figure was comfortably above target and well into expansionary territory.
“Sterling jumped against the dollar and the euro as the resilience of the post-referendum UK economy was highlighted once again,” he concluded.
Britain’s service-based economy
Fears for the service sector were at an increased level. The manufacturing and construction PMIs missed output forecasts at the very beginning of April. Due to the fact that the UK’s economy is around 75 per cent service-based, Britain’s performance on the Services Purchasing Managers Index was crucial.
However, it is believed the weaker pound has led to increased enquiries and demand for UK services abroad. This resulted in the stronger 55.0 figure.
The growth, despite the fears over Brexit and inflation, bodes well for the future of the economy and the pound.
Exchange rate monitoring
Despite the soar in the pound to euro exchange rate, experts have warned holidaymakers to remain savvy when buying foreign currency.
Retail director Simon Phillips, said: “When changing your sterling, always make sure to compare currency rates online to get the best possible deal.”
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