- Pound (GBP) rises for a second day
- BoE is expected to cut rates tomorrow
- Euro (EUR) is falling as the USD surges
- Euro worries over what Trump in power means for trade
The Pound Euro (GBP/EUR) exchange rate is rising sharply after gains yesterday. The pair rose 0.15% in the previous session, settling on Tuesday at €1.1929 and trading in a range between €1.1902 and €1.1936. At 19:00 UTC, GBP/EUR trades 0.64% at €1.2004
The euro is tumbling against the pound and is falling even further against the US dollar in reaction to Trump’s victory in the US presidential election.
The US dollar surged to a 4-month high against its major peers, and the euro often trades inversely to the greenback, explaining the decline.
Investors are also concerned about what Trump’s policies may mean for the European economy if he chooses to impose trade tariffs.
Meanwhile, investors have shrugged off a slight upward revision in business activity. The composite PMI was upwardly revised to 50 in October from 49.7, showing that the economy didn’t contract, but it did stall last month.
Meanwhile, wholesale inflation was also slightly better than expected in September, dropping by 3% year on year, slightly higher than the 3.2% fall forecasts.
The pound is rising against the euro but falling against the stronger U.S. dollar as investors await the Bank of England’s interest rate decision tomorrow.
The central bank is expected to cut rates by 25 basis points, marking the second cut after the August reduction, which was the first of the cycle..
The meeting comes as September inflation fell to 1.7% year over year, below the central bank’s 2% target, although service sector inflation and wage growth remain high.
The meeting comes following the government’s slightly inflationary budget, which means the central bank is unlikely to guide for a further rate cut in December.
The market has raised Bank of England rate cut expectations for next year. It no longer sees three to four rate cuts in 2025 but more like two to three.
