Euro slumps on dire Eurozone PMIs

The euro tumbled on Thursday following the publication of some disappointing Eurozone PMIs.

Sterling is mostly rangebound so far this morning, with GBP/EUR subdued at €1.1640 and GBP/USD flat at $1.2265. GBP/CAD is stable at C$1.5928, while GBP/AUD and GBP/NZD hold steady at AU$1.7753 and NZ$1.9382, respectively.

Following the release of some underwhelming retail sales figures from the UK, the pound’s upside potential looks limited today.

What’s been happening?

The euro was met by notable selling pressure yesterday as EUR investors were left dismayed by the Eurozone’s latest PMI releases.

June’s preliminary figures reported a surprisingly sharp slowing of growth in both the manufacturing and service sectors. This fuelled concerns over a potential recession in the Eurozone and left the euro on the defensive throughout the session.

The pound, meanwhile, trended higher on Thursday as the UK’s own PMIs printed above expectations, with GBP investors welcoming a surprisingly robust performance by the services sector this month.

At the same time, the US dollar was buoyed by a prevailing risk-off mood.

However the ‘greenback’s gains were capped by some lacklustre US economic data, with initial jobless claims and the latest US manufacturing and services PMIs all missing forecasts.

What’s coming up?

Kicking off today’s session was the publication of the UK’s latest retail sales figures.

This sees the pound subdued this morning after May’s release reported a contraction in sales growth. The slump is stoking recession fears as the cost of living crisis begins to take a greater toll on consumer spending.

Also likely to weigh on Sterling is the result of yesterday’s byelections, as the loss of two seats for the Conservatives is another blow for Boris Johnson’s premiership.

The focus for EUR investors this morning will be Germany’s latest IFO business climate index. Will a modest drop in morale in the Eurozone’s largest economy leave the euro on the back foot through the end of the week?

Meanwhile, in the absence of any notable US data releases the direction of the US dollar is likely to be determined by market risk appetite. This could see USD exchange rates strengthen if a cautious mood continues to prevail.