EUR/GBP weakens as robust UK data outweigh upbeat Eurozone PMI readings

• EUR/GBP edges lower on Friday as stronger UK data boosts the Pound.
• The British Pound gains traction after robust Retail Sales and PMI data.
• Eurozone HCOB PMI figures also beat estimates but failed to lift the Euro.

EUR/GBP trades lower on Friday as solid UK Retail Sales and stronger preliminary Purchasing Managers Index (PMI) data lift the British Pound (GBP). Although the stronger-than-expected Eurozone HCOB flash PMI failed to provide meaningful support to the Euro (EUR) and kept the cross under pressure.

At the time of writing, EUR/GBP trades around 0.8733, down about 0.13% on the day, but remains on track for a third straight weekly advance.

Data released by the Office for National Statistics (ONS) showed UK Retail Sales rose 1.8% MoM in January, sharply beating the 0.2% forecast and accelerating from December’s 0.4% increase. On an annual basis, Retail Sales rose 4.5% from a downwardly revised 1.9% (previously 2.5%), comfortably above the 2.8% forecast.

Preliminary PMI data from S&P Global PMI data reinforced the upbeat tone, with the Composite PMI climbing to 53.9, marking a 22-month high, while the Manufacturing PMI rose to 52.0, its highest level in 18 months. The Services PMI remained firmly in expansion territory at 53.9, with all three readings topping market forecasts.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said the survey data are consistent with GDP rising by just over 0.3% in the first quarter if momentum is sustained into March. He added that while the upturn continues to be led by the services sector, there are signs manufacturing is regaining traction, with export orders surging at a pace not seen since the pandemic.

In the Eurozone, HCOB flash PMI data also surprised to the upside. The Composite PMI rose to 51.9 in February from 51.3 in January, above the 51.5 forecast and marking a three-month high.

Manufacturing activity improved to 50.8 from 49.5, beating expectations of 50.0 and reaching a 44-month high as the sector returned to expansion. Meanwhile, the Services PMI edged up to 51.8 from 51.6, though slightly below the 52.0 consensus.

The survey noted that at the composite level, Germany recorded a solid increase in business activity, marking the fastest pace of expansion in four months. In contrast, France saw broadly no change in output compared with January. Activity across the rest of the Eurozone continued to expand, although at the slowest pace since June 2025.