- Pound (GBP) is falling for a second day
- BoE Megan Greene sounded cautious on rate cuts
- Euro (EUR) rises despite recession worries
- German GFK, consumer confidence data, is due tomorrow
The Pound Euro (GBP/EUR) exchange rate is falling for a second straight day. The pair fell -0.12% in the previous session, settling on Tuesday at €1.1995 and trading in a range between €1.1989 and €1.2025. At 15:00 GBP/EUR trades -0.2% at €1.1974.
The pound is moving lower as investors fret over the upcoming autumn budget and despite hawkish comments from Bank of England committee member Megan Greene.
Megan Green, an external member of the Bank of England’s Monetary Policy Committee, said that the central bank may need to slow the pace of interest rate cuts if UK consumers become less worried about savings. Greene warned that if people became less worried or less keen to save, consumption could bounce back at a faster pace than the Bank of England had expected, making it easier for companies to raise prices and for inflation to rise.
Megan Greene’s comments failed to boost the pound, which is trading lower as investors start to fret over the UK autumn budget, which will come just eight days before the Bank of England rate decision.
UK Prime Minister Kerr Starmer has already warned that the budget will be painful, and Finance Minister Rachel Reeves has said that some taxes are likely to rise in her first budget, which she will unveil on October 30th.
Meanwhile, the EUR extended gains for a second session despite a deteriorating economic outlook for the region. Weak data, particularly from Germany, the eurozone’s largest economy, has raised the likelihood of a recession in the region.
Looking ahead, attention will be on the German JFK consumer confidence index for the coming months, which could infuse volatility into the euro. Economists expect German consumer confidence to rise need to -21.5 up from -22. Weaker-than-expected data could confirm a further deterioration in morale in the eurozone’s largest economy.