The pairing was able to edge higher as Germany’s flash Markit Manufacturing PMI figures for March sank deeper into contraction, with a reading of 44.7. Today also saw the release of the French flash Markit PMI figures for the month, which also fell further into contraction at 48.7. These signs of slowdown in the Eurozone economy are causing concern for investors and weighing on the euro. The Eurozone’s flash composite PMI figure for March slipped to 51.3.
Chris Williamson, Markit’s Chief Business Economist, noted: “The Eurozone economy ended the first quarter on a soft note, with the flash PMI running at one of the lowest levels seen since 2014.
“The survey indicates that GDP likely rose by a modest 0.2 percent in the opening quarter, with a decline in manufacturing output in the region of 0.5% being offset by an expansion of service sector output of approximately 0.3 percent.”
Sterling, meanwhile, has been able to recover yesterday’s losses on the news that the EU has granted the UK a short Brexit extension.
Prime Minister Theresa May must now try, once again, to get her withdrawal agreement through Parliament.
If Mrs May’s deal is passed it could mean a Brexit delay until May, but if it is not it would result in a much shorter extension until 12 April, which would place enormous pressure on the UK to prepare its next steps or face a no-deal.
Donald Tusk, the President of the European Council, said: “What this means in practice is that, until that date, all options will remain open, and the cliff-edge date will be delayed.
“The UK government will still have a choice of a deal, no-deal, a long extension or revoking article 50.”
There are no notable UK economic data releases today, with many pound traders instead focusing on the latest Brexit developments.
It’s likely to be a similar story next week, although German confidence, retail sales and inflation data could also have an impact on the pound euro exchange rate.