- Pound (GBP) rises as Boris Johnson pulls out of the contest
- UK PMI data is also due
- Euro (EUR) rises after PPI remains high
- Eurozone PMI data is due
The Pound Euro (GBP/EUR) exchange rate is bounding higher after losses in the previous week. The pair fell -0.24% last week, settling on Friday at €1.1458 after trading in a range between €1.1383 – €1.1660 across the week. At 05:45 UTC, GBP/EUR trades +0.45% at €1.1514.
The pound is soaring higher at the start of the week after the former Chancellor Rishi Sunak finally announced that he would be running for the position of Prime Minister in the latest leadership battle and as ex-PM Boris Johnson dropped his comeback bid. As a result, Sunak is the favourite to win and also considered a calming force for the financial markets. The markers, and particularly the pound, fell steeply under Liz Truss’s chaotic government.
Voting will start today, and the new Prime Minister is expected to be announced by the end of the week at the latest. Sunak could be named as PM today, given that the rules state that if only one candidate secures the backing of 100 Conservative lawmakers, they will the names PM today.
In addition to the leadership race, UK PMI data will also shed some light on the health of the UK economy. The UK services PMI is expected to fall into contraction at 49 in October, down from 50. In September, the level which separates expansion from contraction.
The euro rose on Friday after eurozone consumer confidence unexpectedly rose in October after falling to its lowest level on record in September. The European Commission reported that morale rose to -27.6, up from -28.8. Economists had forecast a decline to -30.1.
Still, consumer confidence remains very close to the record low in September and well below its long-term average of -11.00.
Looking ahead, attention turns to eurozone composite PMI data, which is considered a good gauge of business activity. The PMI is forecast to fall to 47.6, down from 48.1 in September.
