- Pound (GBP) regains pose after steep losses on Monday
- UK PSNB falls but interest payments rise
- Euro (EUR) steady despite a lack of data
- German elections on Sunday
The Pound Euro (GBP/EUR) exchange rate is rising on Tuesday after steep losses in the previous session. The pair settled on Monday at €1.1645 towards the low of the day and a level last seen at the start of September. At 09:45 UTC, GBP/EUR trades +0.13% at €1.1661.
The Pound is finding its feet again after concerns over China’s Evergrande hit sentiment hard in the previous session. Investors across the globe panicked that the likely default of China’s second largest property developer company later this week would have, much broader implications across global financial markets. However, today fears are easing that Evergrande will turn into a Lehman’s moment which is helping to lift the Pound.
Also underpinning the Pound were comments from the UK business secretary Kwasi Kwarteng who rejected warnings that the UK energy would result in energy shortages this winter.
The UK economic calendar is relatively quiet today. Data revealing that UK public sector net borrowing fell in August is lifting the Pound. Borrowing fell to £20.5 billion in August, down £5.5 billion in the same month last year according to data from the Office of National Statistics.
However, interest payments rose by £2.9 billion compared to the same month last year and was significantly higher than the £1.6 billion forecast by the Office of Budget Responsibility.
There is no more data due today, attention will turn to the Bank of England rate decision due on Thursday.
The Euro fell in the previous session versus the US Dollar but managed to gain ground against Sterling.
The Eurozone economic calendar is quiet this week, with no high impacting releases either yesterday or today. Instead, sentiment is driving movement in the common currency in addition to any moves in the greenback.
Looking ahead all eyes are on the German elections on Sunday which are expected to reveal a shift to the left. Whilst a coalition government is still expected Euro trades will be watching closely given that Germany has been the only real growth engine in Europe over the past decade.
