- Pound (GBP) rises despite cautious BoE Tenreyo
- Chancellor’s Budget due tomorrow
- Euro (EUR) falls after German business confidence deteriorates
- ECB rate decision due later in the week
The Pound Euro (GBP/EUR) exchange rate is heading higher for a third straight session. The pair settled 0.3% higher on Monday at €1.1859 towards the high of the day. At 05:45 UTC, GBP/EUR trades +0.04% at €1.1864.
The Pound rallied higher versus the weaker Euro but lost ground versus the US Dollar. With little on the economic calendar for investors to sink their teeth into, attention was on Bank of England policy maker Silvana Tenreyo, a known dove at the central bank. Silvana said that she needs more time to judge the impact of the end of the furlough scheme before deciding whether to hike interest rates.
Separately, Brexit is under the spotlight as the European Union offered a compromise to the Northern Ireland trade problem. However, Brexit minister David Frost warns that the proposal doesn’t go far enough.
The Euro came under pressure in the previous session following the publication of weaker than expected German IFO data. The data revealed that business sentiment in the Eurozone’s largest economy deteriorated to 97.7 in October a six-month low. The index fell from 98.9 last month with the fall marking the fourth straight month of declines.
There is no high impacting UK data due today. Attention will be firmly on Wednesday’s autumn budget.
Supply chain bottlenecks are the principle factor behind the declining expectations for businesses as factory output slowed.
Adding to the downbeat mood towards the Euro, Germany’s Bundesbank downwardly revised full year growth to 3.7%
There is no high impacting data due to be released today. Instead, investors will look ahead to European Central Bank monetary policy announcement on Thursday. The ECB is not expected to tighten monetary policy. Instead, policy makers are likely to wait until the December meeting when they have fresh growth and inflation forecasts.
The central bank could provide some details over what their plan could be when the bond buying programme expire in March 2021.