Euro hits fresh 17-month lows against British Pound after Eurozone, UK PMIs

• EUR/GBP extends losses to levels near 0.8360 and heads to a nearly 3% decline in a 4-week sell-off.
• UK PMIs show strong business activity figures in October, adding to evidence of a resilient UK economy.
• Eurozone PMIs highlight a moderate slowdown, as France's activity contracted again in October.

The Euro (EUR) keeps struggling to find a bottom against a strong British Pound (GBP) on Friday, as UK business activity data strengthened the case for a Bank of England (BoE) interest rate hike in November, while Eurozone data increased concerns about France. The EUR/GBP pair has dropped to a fresh 17-month low near 0.8360, on track for a nearly 3% sell-off in a four-week losing streak.

Business activity accelerated in the UK in October, as measured by the S&P Global Flash Purchasing Managers Index. The Manufacturing PMI improved to 52.8 from 51.9 in September, beating expectations of a slight decline to 51.8, while the Services PMI rose one whole point, to 53.1, also against the market forecast for a decline to 51.8

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, affirmed 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’s business activity shows a moderate slowdown

In the Eurozone, preliminary business activity data for October revealed that private sector growth eased, weighed by the contraction figures in France, following the first rise in 10 months in September, while Germany and the rest of the region as a whole continued growing, although at a slower pace.

Eurozone’s HCOB Manufacturing PMI eased to 52.4 from 52.9 in September, below the 52.8 reading expected by the market, and the Services PMI dropped to 51.7 from 53 in the previous month, also below the 52.8 reading anticipated by the market. 

Data from Germany has been mixed, with the HCOB Manufacturing PMI accelerating to 54.2 from 53.9 in September, while Services activity eased to 51.7 from 53 in the previous month.