- Pound (GBP) is rising for a fourth day
- UK construction PMI dropped sharply to 45
- Euro (EUR) falls after German exports drop
- German factory orders are due
The Pound Euro (GBP/EUR) exchange rate is rising for a fourth straight day. The pair rose +0.08% in the previous session, settling on Thursday at €1.1552 and trading in a range between €1.1547 – €1.1556. At 10:35 UTC, GBP/EUR trades +0.12% at €1.1567 and is set to rise 0.22% across he week, the second straight weekly gain.
The pound is pushing higher despite data that showed that the UK was experiencing the deepest housebuilding slump in construction since 2020 and after a Bank of England survey showed that UK companies saw prices rising more slowly.
The UK construction PMI plunged to 45 in September, down from 50.8 in August, marking its lowest level since May 2020 when pandemic restrictions were in full force. While the data wasn’t encouraging, the sector is a relatively small part of the UK economy. This data came after the manufacturing and services PMIs also came in below the key 50 level, which separates expansion from contraction.
Separately the Bank of England’s decision-maker panel survey revealed that British companies cut expectations for selling price increases over the past three months but forecast wage growth remaining high.
Money markets are currently pricing in around a 30% probability that the central bank will raise interest rates again in November but that would be the final hike of the hiking cycle.
Looking ahead there is no high-impact UK economic data so the pair will be driven by sentiment.
The euro fell yesterday after data showed that German exports tumbled again in August dropping by 1.2% after falling 1.9% in July. The data shows that high inflation, an industrial slowdown as well and weakening demand from China have taken their toll on Germany’s export-orientated economy.
Meanwhile, France’s industrial production also unexpectedly fell by 0.4%.
Looking ahead, attention will turn to German factory orders, which are expected to rise 1.8% month on month in August after tanking 11.7% in June July.
