- Pound (GBP) edges lower after 2-days of gains
- Jitters surrounding the budget weigh on sentiment
- Euro (EUR) rises after German retail sales rise
- ECB minutes showed concerns over growth
The Pound Euro (GBP/EUR) exchange rate is falling after two days of gains. The pair rose 0.13% in the previous session, settling on Wednesday at €1.1947 and trading in a range between €1.1918 and €1.1953. At 10:00 UTC, GBP/EUR trades -0.09% at €1.1938.
The pound is heading lower amid a quiet day on the economic calendar, which is leaving investors. turning their focus to the UK budget
Chancellor Rachel Reeves will unveil the first labor government on October 30th, and investors will weigh up what the Budget may or may not include and how much growth might be impacted.
Recent rumors have pointed to Rachel Reeves changing the government’s fiscal rules, allowing it to borrow billions more for infrastructure investments. There are concerns that this could lead to unsustainable debt. However, this is also being met with some optimism that the budget could also have some focus on boosting growth.
The euro is rising after German retail sales rose 1.6% month over month in August, following gains of 1.5% in July and a 1.1% decline in June. Broadly speaking, the German consumer is holding up well and given that private consumption accounts for around 50% of the German economy. Today’s retail sales data follows stronger trade data yesterday and amid a recovery in industrial production.
Yet despite the recent uptick in data from the Eurozone’s largest economy, the outlook remains uncertain. The German government forecasted a contraction of 0.2% this year, followed by the economy contracting a further 0.3% next year.
Meanwhile, the minutes of the September ECB meeting show a cautious stance from the central bank toward cutting interest rates. The minutes revealed that policymakers were keen to remain data-dependent and make decisions on a meeting-by-meeting-a-meeting basis. The minutes also showed a central bank that was increasingly concerned about disappointing growth but was still hopeful of a recovery in consumption.