- Pound (GBP) weighed down by Brexit concerns
- Relations deteriorate between UK & France over fishing
- Euro (EUR) rises despite dismal German retail sales
- EZ & German manufacturing PMI due
The Pound Euro (GBP/EUR) exchange rate is edging lower on Tuesday, extending losses from the previous session. The pair settled -0.54% lower on Monday at €1.1776 towards the low of the day. At 05:45 UTC, GBP/EUR trades -0.05% at €1.1765
The Pound traded under pressure in the previous session and was the worst performing G10 currency on Monday as tensions with France over fishing remain elevated. However, the latest developments are more encouraging. French President Emmanuel Macron backed down, announcing that the French government would delay fishing sanctions on the UK for now.
France claims that the UK has not fulfilled its pledges in Brexit with regards to allowing fair access to French fishing boats.
Brexit concerns overshadowed upbeat data as the UK manufacturing PMI was revised higher in October to 57.8, up from the flash estimate of 57.1.
Today the UK economic calendar is quiet. Investors are turning their attention towards the BoE interest rate decision on Thursday. The market is fully pricing in an interest rate rise amid persistently high UK inflation.
The Euro powered higher in the previous session as investors shrugged off dismal German retail sales. Sales in the eurozone’s largest economy unexpectedly slumped by -2.5% year on year, the second decline in sales in three months. The weak reading could be reflecting softer consumer spending which raises concerns over a consumer led recovery. The softer data did support the European Central Bank’s decision to not tighten monetary policy at the latest central bank meeting last week.
Today attention will be on the manufacturing PMI data from both Germany and the Eurozone bloc. Both readings are the final print for October so may not be that market moving. Analysts are expecting the readings to confirm the flash prints of 588.2 and 58.5 respectively.