Forex snapshot

David Madden looks at how recent economic data has affected the EUR/USD and GBP/USD pairs.

Euro drops below $1.36 mark

The euro is under pressure versus the US dollar as manufacturing in the eurozone declines in May.

The euro is trading at $1.3598, down 0.27% on the day as the region posts a decline in manufacturing output in May, with the weaker-than-expected figures from Germany particularly worrying. As I previously mentioned, the main focus of the week will be the European Central Bank meeting on Thursday, and the poor manufacturing figures from Germany and the eurozone would suggest Mario Draghi needs to act sooner rather than later.

The US will announce the latest manufacturing purchasing managers index report at 2.45pm (London time), and the expectation is for a reading of 56.2. The euro will find it difficult to retake the $1.3640 level, and a strong figure from the US could put the euro on a path towards $1.35.

Spot FX EUR/USD chart

Sterling continues to slide

The pound is off versus the US dollar as the UK revealed a drop in manufacturing in May.

The pound is trading at $1.6750, a touch lower on the day as it continues its downward trend versus the US dollar after UK manufacturing fell on the month. This morning the UK also revealed a slight drop in mortgage approvals, which also weighed on the pound. The Bank of England will reveal its interest rate decision on Thursday at 12pm, but as usual no change is expected. The minutes later in the month will be more important.

Today, the US will report ISM manufacturing and construction spending at 3pm. The consensus is for a reading of 55.7 and an increase of 0.8% respectively; stronger reports could push the pound below $1.67.

Spot FX GBP/USD chart

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