- Pound (GBP) edges higher for a second day
- UK businesses are nervous ahead of the UK budget
- Euro (EUR) falls despite Germany’s trade surplus rising
- Concerns over a contraction in Germany remain.
The Pound Euro (GBP/EUR) exchange rate is rising for a second straight day. The pair rose 0.1% in the previous session, settling on Tuesday at €1.1931 and trading in a range between €1.1896 and €1.1945. At 10:00 UTC, GBP/EUR trades +0.03% at €1.1935.
The pound is inching higher, but gains are limited by the fact that business confidence fell in Q3 as tax worries hit investment ahead of the new Labour government’s first budget.
According to the Institute of Chartered Accountants’ quarterly Business Confidence Monitor, sentiment fell to 14.4 in the 3 months to September, down from 16.7 in the previous quarter and the first decline in a year. The data points to a nervousness among businesses.
These figures followed a separate survey released yesterday by the British Chambers of Commerce, which also showed that morale deteriorated owing to concerns surrounding the possible impact of the Budget.
Chancellor of the Exchequer Rachel Reeves is due to unveil the first Labour budget on October 30th. Reeves, along with Prime Minister Kier Starmer, have warned that the Budget will be painful for some after uncovering a £22 billion black hole.
The euro is unchanged despite the German trade surplus increasing. Germany’s trade surplus increased in August after exports unexpectedly rose and amid a larger-than-expected decline in imports. Exports rose 1.3% in August after a 1.7% increase in July, marking the second straight increase. Meanwhile, imports fell 3.4% after rising 5.3% in July. Imports fell for the first time in three months.
The data comes after stronger-than-expected German industrial production in August. Data yesterday showed that industrial production in the eurozone’s largest economy rose 2.9% month on month. However, this was more likely a technical rebound following a steep decline in the previous month.
However, these data releases have done little to alleviate recession fears surrounding Germany, with the risk of another contraction in Q3 still high.
