- Pound (GBP) extends gains for a second day
- UK outlook remains weak
- Euro (EUR) falls after PPI inflation drops sharply
- EZ consumer confidence data is due
The Pound Euro (GBP/EUR) exchange rate is rising for a second straight day. The pair rose 0.34% in the previous session last week, settling at €1.1544 after trading in a range between €1.1496 – €1.1551. At 05:45 UTC, GBP/EUR trades +0.08% at €1.1553.
The pound rose against the euro yesterday but fell against the USD as Prime Minister Rishi Sunak pledged to do more to help support energy-intensive businesses, which are struggling in the face of surging energy costs. His comments came at the Confederation of British Industry conference. He said that more detailed plans would be published in due course.
Today the focus will be on the state of UK public sector finances with the release of the public sector ned bet. Expectations are for net borrowing to fall from -£19.25 billion in September to £-15.38 billion in October.
The data comes after the Chancellor’s fiscal statement last week, which saw several announcements to raise taxes and cut spending to fill a £55 billion black hole. Still, the outlook remains gloomy, with the UK economy expected to contract by 1.4% in 2023.
The euro fell in the previous session after German producer price inflation fell to 34.5% year on year in October, down from 45.8% in September. This was well below forecasts of 41.5% and was the first decline in six months. This could indicate that peal inflation in the eurozone’s largest economy is starting to pass.
The data came as European Central Bank Chief economist Philip Lane said that the central bank could consider slowing the pace of rate hikes in the December meeting. The ECB has raised rates by 200 basis points in the last three months from record low levels.
Attention now turns towards eurozone consumer morale data which is expected to show that sentiment picked up again in November to -26, up from -27.6 and rising from September’s record low.