GBP/USD: Pound Steady vs. Dollar Ahead of UK Budget
  • Pound (GBP) is rising with all eyes on the Budget
  • UK mortgage approvals rise to a 2-year high
  • Euro (EUR) is falling despite German consumer confidence rising
  • Eurozone GBP data is due tomorrow

The Pound Euro (GBP/EUR) exchange rate is rising after small losses yesterday. The pair fell -0.04% in the previous session, settling on Monday at €1.1997 and trading in a range between €1.1982 and €1.2016. At 16:00 UTC, GBP/EUR trades 0.25% at €1.2027.

The pound is edging higher after data showed some signs of recovery in the housing market amid a cautious mood ahead of tomorrow’s autumn budget.

Bank of England data today showed that mortgage approvals in the UK rose to their highest level in two years. The data points to the housing market’s ongoing recovery, which should help to support confidence in the UK.

Meanwhile, data from the British Retail Consortium showed that prices in British shops fell 0.8% year on year, down from a 0.6% fall in August. The data suggests that inflation is trending in the right direction for the Bank of England to continue cutting interest rates.

Meanwhile, investors are now looking ahead to tomorrow’s Autumn Budget, where chancellor Rachel Reeves is expected to hike taxes, cut spending, and change the fiscal golden rules to plug a £22 billion black hole in public finances and find a further £ 18 billion for additional spending. She needs to do this while maintaining fiscal stability and reassuring the market.

The euro is falling despite the latest German consumer confidence report pointing to an improvement in sentiment in the eurozone’s largest economy.

German GfK German consumer confidence improved to -18.3, down from -21. This was above expectations of a fall to -20.5. The brightening of sentiment comes as inflation has cooled and interest rates are reducing. Despite the improvement in sentiment, the EUR is falling on expectations that the ECB will continue cutting rates.

Looking ahead, Eurozone GDP data and German inflation figures are due tomorrow. Weak growth and cooling inflation could pull EUR lower.