Recently, the Exchange Rate of the Euro against the Pound has slightly fallen, breaking below 0.8660, ending a two-day pump trend. Although it reached a high of 0.8670 an hour ago, it is currently hovering around 0.8654. This change is mainly influenced by the economic data released by Europe and the UK respectively.

In the Eurozone, the data shows a certain resilience. The HCOB announced that the August Manufacturing Purchasing Managers' Index (PMI) is not bad, reaching 50.7, exceeding the preliminary estimate of 50.5, and better than July's 50.5, marking two consecutive months of expansion and achieving the strongest performance since early 2022. Particularly, strong domestic demand in Southern Europe has driven this recovery trend, while Germany's performance is also commendable, reaching 49.8, the best in three years. The composite PMI for August rose to 51.1, also above the original expectation and July's 50.2, indicating that the private sector growth rate is the fastest in the past 15 months.

In contrast, the industrial situation in the UK continues to be weak. The S&P Global/CIPS Manufacturing PMI fell to 47.0 in August, lower than the expected 47.3. This marks the 11th consecutive month of contraction. The survey shows that both orders and exports have declined at the fastest rate in four months, attributed to external pressures such as US tariffs, weak customer confidence, and weakening global demand. According to Reuters, employment numbers have also decreased for ten consecutive months, indicating that the manufacturing sector remains weak.

On the other hand, the labor market data from the Eurozone adds a positive color to the economy, with the unemployment rate remaining at 6.2% in July, in line with expectations, down from 6.3% in June. This stability indicates that, despite the pressures faced by the global economy, the labor market in the Eurozone continues to show good resilience.

Looking ahead, people's attention is turning to the developments of the European Central Bank. ECB policymaker Cipollone will speak on Monday, followed by comments from ECB President Christine Lagarde. Subsequently, the market will closely monitor the preliminary Eurozone inflation data for August, which will be released on Tuesday. The expectations for the Harmonized Index of Consumer Prices (HICP) have been slightly downgraded, with the year-on-year growth rate expected to slow from 2.3% to 2.2%, while the overall HICP is expected to remain at 2.0%.

Talking about the European Central Bank (ECB) and its impact on the euro is quite an interesting topic. The ECB is located in Frankfurt, Germany, and is the central bank of the eurozone, responsible for formulating monetary policy in the region, primarily by adjusting interest rates to achieve the price stability target, usually set around 2%. When interest rates are high, it typically leads to a rise in the euro.

In extreme economic situations, the European Central Bank may adopt a policy tool known as Quantitative Easing ( QE ). This measure involves issuing euros to purchase assets from banks and other financial institutions, such as government and corporate bonds. Theoretically, QE would lead to a weaker euro. Quantitative Tightening (QT) is the reverse operation of QE, typically carried out when the economic recovery begins and inflation rises; at this point, the ECB will stop purchasing more bonds and cease reinvesting the principal of existing bonds, which usually has a positive impact on the euro.

Of course, everyone should still treat this information with caution, as past performance does not necessarily predict future results.
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