- Pound (GBP) falls amid BoE rate cut expectations
- The deteriorating market mood also pulls GBP lower
- Euro (EUR) rises after German industrial output rebounds
- Concerns over the economy remain
The Pound Euro (GBP/EUR) exchange rate is falling, extending losses from yesterday. The pair fell -0.36% in the previous session, settling on Monday at €1.1919 and trading in a range between €1.1904 and €1.1970. Today, at 10:15 UTC, GBP/EUR trades -0.03% at €1.1916.
The pound is falling, extending losses from yesterday as the market continues to re-price Bank of England rate cut expectations and amid a deteriorating market mood.
The market continues to digest comments from Bank of England governor Andrew Bailey last week. He said that the central bank could act more aggressively to reduce interest rates should inflation data permit it.
Inflation in the UK remains around the Bank of England’s 2% target; however, wage growth and service sector inflation remain high.
Still, yesterday’s industry data from the Recruitment and Employment Confederation showed that new hires’ wage growth slowed to its weakest level in almost four years.
Looking ahead, the UK economic calendar is relatively quiet; however, risk sentiment is souring, which could drag on the pound.
Meanwhile, the euro is rising following stronger-than-expected German industrial production figures.
The data showed that industrial production in the eurozone’s largest economy rose by more than expected to 2.8% month on month in August, ahead of 0.8% forecast. This was also a rebound from the 2.4% drop in July.
However, the stronger-than-expected data does little to calm concerns over the health of the German economy, which appears to be heading for downtown, if not a contraction.
The data came after German factory orders plunged 5.8% in August marking the steepest decline so far this year.
The data, combined with inflation below the ECB’s 2% target, means the central bank is expected to cut rates later this month.