European session review: EUR trades mixed, GBP rises after PMI releases

EUR traded mixed in the European session on Friday, following the release of IHS Markit's flash purchasing managers'indexes (PMIs), which indicated that business activity in the Eurozone accelerated more than expected this month. While EUR fell against GBP, it appreciated against the rest of major rivals.

Markit's flash estimates showed that manufacturing PMI for the Eurozone climbed to a 12-month high of 49.1 in February from 47.9 in the previous month, beating economists' forecast for 47.5. Meanwhile, the flash Eurozone services PMI rose to a 2-month high of 52.8 from 52.5 in January, also above economists' projection of 52.2. As a result, flash Eurozone Composite PMI, tracking the combined change in activity across the manufacturing and service sectors, increased to 51.6 from 51.3 in January, indicating the largest monthly expansion in business activity since August 2019. Economists had forecast the indicator to decline to 51.

A separate survey from Markit revealed that Germany's manufacturing sector's activity expanded in February to the highest since January 2019. The flash Germany manufacturing PMI surged from January’s 45.3 to a 13-month high of 47.8, beating economists' forecasts of 44.8. However, the flash composite output index was at to 51.1, down slightly from January’s five-month high of 51.2, impacted by a softer pace of growth in service sector activity - flash Germany Services PMI fell to a 2-month low of 53.3 in February from 54.2 in the previous month.

GBP rose against its major counterparts, supported by Markit/CIPS survey, which revealed that the flash UK manufacturing PMI jumped to 51.9 in February from 50.0 in January, signaling the strongest improvement in overall business conditions since April 2019. The strong performance helped to offset a slight loss of momentum in the service economy - flash UK Services PMI dropped to 53.3 in February from 53.9 in January but remained well above the crucial 50.0 no-change value. Flash UK composite output index was unchanged at 53.3 in February, pointing to the joint-fastest expansion of private-sector output since September 2018.