- Pound (GBP) falls for a second day after the BoE rate decision
- Services PMI is expected to be 49.2
- Euro (EUR) rises after German trade data
- Eurozone unemployment is up next
The Pound Euro (GBP/EUR) exchange rate is falling for s second straight day. The pair fell -0.07% in the previous session, settling on Thursday at €1.1484 and trading in a range between €1.1444 – €1.1511. At 09:00 UTC, GBP/EUR trades -0.15% at €1.1466.
The pound is falling for a second straight day after the Bank of England left interest rates on hold at a 15-year high of 5.25%. While the central bank may have hiked for the last time, Governor Andrew Bailey warned that rates would stay high for longer.
Today, the attention is on UK services activity data, the final reading for October, which is expected to confirm the preliminary reading of 49.2. This would be down from 49.3 in September, where the level 50 separates expansion from contraction.
The service sector contributes to around 70% of the UK economy, so weak services PMI data could raise concerns of an extended downturn in the second half of the year.
The data comes ahead of next week’s GDP figures, which will be watched closely for clues over whether the UK’s economy contracted in the third quarter.
The euro is heading higher for a second straight day as attention turns to unemployment figures from the eurozone and after German trade balance data.
The German trade surplus came in at better than expected €16.5 billion, down from an upwardly revised €17.7 billion in August but ahead of forecasts of €16.3 billion.
Delving deeper into the data, exports fell by 2.4% after falling 1.2% in August. The fall in exports comes after manufacturing PMI data yesterday signaled a deteriorating demand environment, with new business inflows falling at the fastest pace since May 2020.
Given that German exports account for over 50% of GDP, a weakening demand environment ‘could raise concerns of a prolonged German recession.
Looking ahead, eurozone unemployment data is expected to show the unemployment held steady at 6.4% in September.
