- Pound (GBP) inches higher after yesterday’s losses
- BoE rate decision is next week
- Euro (EUR) awaits the ECB rate decision
- ECB is expected to leave rates unchanged
The Pound Euro (GBP/EUR) exchange rate is rising after losses in the previous session. The pair fell -0.22% yesterday, settling on Wednesday at €1.1454 and trading in a range between €1.1450 – €1.1489. At 08:35 UTC, GBP/EUR trades +0.04% at €1.1460.
The euro pushed higher in the previous session after German business confidence improved slightly in October. The closely watched German Ifo business climate index rose to 86.9 in October, up from 85.8 in September. This was also ahead of the 85.9 level that analysts had penciled in. While the data was overall a bit better than expected, it doesn’t take away from the broader message that the German economy is in a difficult place.
The data came after German PMIs earlier in the week showed another deep contraction.
Attention now turns to the European Central Bank interest rate decision, where the central bank is widely expected to leave interest rates unchanged at a record 4%.
In the September meeting, the ECB hinted that it’s unlikely to raise interest rates at the October meeting, given the weak data since the ECB has fewer reasons to hike.
Attention will be on forward guidance and on what to expect from the December meeting. A cautious-sounding ECB, particularly with regard to the outlook for the eurozone economy, could send the euro sharply lower.
The pound fell in the previous session amid a risk-off mood in the market and as investors assume that the Bank of England will not raise interest rates at next week’s meeting. However, the central bank is expected to keep interest rates high for longer despite the deteriorating economic outlook.
Today and tomorrow, the UK economic calendar is quiet, giving investors little in the way of fresh data to digest. Sentiment will likely move sterling ahead of next week’s BoE rate decision.
