- Pound (GBP) slips ahead of a busy week
- Unemployment, inflation & the budget due this week
- Euro (EUR) rises ahead of industrial production data
- ECB remains hawkish
The Pound Euro (GBP/EUR) exchange rate is edging lower at the start of the week after booking modest gains last week. The pair rose +0.14% last week, settling on Friday at €1.1432 after trading in a range between €1.1327 – €1.1561. At 08:45 UTC, GBP/EUR trades -0.07% at €1.1424.
The pound is edging lower in cautious trade on Monday ahead of a busy week on the economic calendar and ahead of the Chancellor’s fiscal statement, where he is expected to raise taxes and cut spending to plug a £50 billion hole in public finances. This comes at a time when cracks are starting to show in the UK economy.
According to the latest data from Rightmove, house prices continue to fall amid the ongoing fallout from the min-budget bond market rout. Asking prices dropped 1.1% month on month in October after a 0.9% rise in the previous month. While the property market is certainly slowing as the UK’s bleak outlook hurts confidence, Liz Truss’ mini budget appears to have accelerated the process.
Elsewhere the British Confederation of British Industry said that the government must make unpopular choices in some areas in order to boost business investment and economic growth. These comments come ahead of Thursday’s budget, which is expected to see the government double down on fiscal tightening.
The euro is edging higher but lacks any real conviction. The common currency is finding some support from news that Russian troops have withdrawn from the Kherson, raising hope that Russian might look towards the negotiating table with Ukraine.
On the economic calendar, the focus is on eurozone industrial production which is expected to rise at a slightly lower rate of 0.3% month on month in September after rising 1.5% in August.
The data could give the euro some direction it is not expected to influence the European Central Bank. Last week ECB President Lagarde noted that inflation was still too high and more rate hikes would be needed.