GBP/EUR: Euro Jumps vs. Pound As German Coalition Averts Collapse
  • Pound (GBP) rises despite inflation cooling
  • BoE’s Broadbent warned of higher rates
  • Euro (EUR) falls as German consumer confidence falls to -25.6
  • German inflation is due tomorrow

The Pound Euro (GBP/EUR) exchange rate is rising after losses in the previous session. The pair fell -0.11% in the previous session, settling on Monday at €1.1647 and trading in a range between €1.1628 – €1.1665. At 08:35 UTC, GBP/EUR trades +0.17% at €1.1666.

The pound is rising despite signs of inflation slowing. Prices in British stores rose in August at the slowest pace in almost a year in a sign that the Bank of England’s rate hikes could be working.

According to the British Retail Consortium, annual shop price inflation cooled to 6.9% year on year in August, its lowest level since October 2022 and down from 7.6% in July. Food prices fell to 11.5%, down from July’s 13.4%.

However, the data comes after the Bank of England’s Broadbent warned that interest rates could remain higher for a longer period of time. The BoE is expected to raise interest rates for the 15th straight meeting in September, taking rates to 5.5%.

Looking ahead the UK economic calendar is quiet with no major UK economic releases either today or tomorrow.

The euro trades lower after German consumer confidence, which unexpectedly fell in September to -25.5, down from -24.6 in August and missing forecasts of -24.3.

Consumer morale fell in the eurozone’s largest economy, reversing an improvement in August amid gloomier income expectations and elevated inflation.

According to the GFK the chances of the consumer mood recovering sustainably this year are shrinking. Inflation, although cooling, remains elevated. German inflation data is due to be released tomorrow and is expected to show that consumer prices fell to 6% year on year, down from 6.2%.

The data comes after ECB President Christine Lagarde warned that interest rates will stay high for as long as necessary to slow inflation which is still too high.