EUR/GBP steady above 0.8650 as traders weigh US-EU deal and PMI data

• EUR/GBP trades around 0.8660 on Thursday, consolidating after Wednesday's rebound.
• The US and EU have struck a trade agreement, combining tariff relief with large-scale energy and investment pledges.
• Eurozone PMI showed manufacturing back in expansion, while UK PMI hit its strongest pace since April on robust services despite deeper factory weakness.

The Euro (EUR) is holding steady against the British Pound (GBP) on Thursday, consolidating gains after Wednesday's sharp rebound. At the time of writing, EUR/GBP trades around 0.8660, keeping a foothold above the 0.8650 handle as traders digest the latest transatlantic trade deal and fresh Purchasing Managers' Index (PMI) readings from both economies.

The United States (US) and the European Union (EU) unveiled a long-awaited joint trade framework on Thursday. The pact caps most tariffs at 15%, easing concerns over escalating protectionism, while leaving U.S. auto duties at 27.5% in place until the EU enacts its own tariff-cutting measures. As part of the agreement, the EU committed to purchase $750 billion in US energy supplies, including LNG, oil, and nuclear by 2028, alongside $40 billion in American AI chips to secure technological supply chains. In return, European companies will channel $600 billion in investments into strategic U.S. sectors, ranging from manufacturing to clean energy. The deal also covers digital trade, regulatory alignment, and sustainability standards, underscoring a shift from short-term tariff relief toward long-term industrial cooperation. For the Euro, the pact is seen as supportive by reinforcing industrial demand and cementing economic ties with the world's largest economy.

Eurozone PMI surprises on the upside

The HCOB Composite PMI (August preliminary) rose to 51.1, above the forecast of 50.7 and improving from 50.9 in July. Manufacturing activity returned to expansion for the first time in months, climbing to 50.5 compared with expectations of 49.5. The services sector eased slightly to 50.7, just below the forecast of 50.8 and down from 51.0 in July, though it still signaled growth.

UK PMI highlights services strength, manufacturing drag

The S&P Global Composite PMI (August preliminary) advanced to 53.0, exceeding the forecast of 51.6 and rising from 51.5 in July, marking the fastest pace since April. Services drove the improvement, with the index climbing to 53.6, above expectations of 51.8 and unchanged from July. In contrast, manufacturing weakened further, slipping to 47.3, below the forecast of 48.3 and down from 48.0 in July, pointing to a deeper contraction in the sector.

Market attention will now turn to upcoming consumer confidence data for additional direction. The Eurozone Consumer Confidence Index (August preliminary) is scheduled for release later on Thursday, with expectations at -14.9 compared to -14.7 in July, signaling that household sentiment may remain subdued.

In the United Kingdom, the GfK Consumer Confidence Index (August) is due on Friday, with markets forecasting -20, slightly weaker than the -19 recorded in July. These readings will provide further insight into household spending prospects and could influence the near-term trajectory of EUR/GBP.