- Pound (GBP) falls for a third straight day
- UK consumer spending rose 1% in August
- Euro (EUR) rises amid a quiet economic calendar
- ECB could cut rates again next week
The Pound Euro (GBP/EUR) exchange rate is falling for a third straight day. The pair fell 0.05% in the previous session, settling on Monday at €1.1875 and trading in a range between €1.1856 and €1.1892. At 18:00 UTC, GBP/EUR trades -0.06% at €1.1868.
The pound was moving lower amid a risk off mood in the market and despite consumer spending increasing last month. British consumer spending rose modestly in August, boosted by spending on food and drink as households enjoyed the warmer weather.
According to Barclays, consumer spending on credit and debit cards increased by 1% annually after two months of decline. Meanwhile, figures by the British Retail Consortium also showed that spending in shops rose by 1% compared to August last year, marking the strongest increase since March.
The reports support the view that the British economy will expand at a solid pace in the second half of the year. Consumers are expected to increasingly support the economy, which has been reliant on government spending for growth.
However, despite the good news, the pound was unable to book gains as the broader market mood soured considerably at the start of a data-heavy week.
The euro is inching higher against the pound but struggling against the U.S. dollar on a quiet day on the economic calendar. Gains in the euro are limited given that the ECB is widely expected to cut interest rates next week.
Data on Friday showed that eurozone inflation cooled to 2.2% year on year, down from 2.6%, and figures on Monday showed that the manufacturing sector remained deep in contraction.
Looking ahead tomorrow will be on services PMI data and wholesale inflation, as measured by the producer price index. Cooling inflation and any signs of weakness in the dominant service sector could add to ECB rate cut expectations
