- Pound (GBP) falls after gains yesterday
- BoE is expected to cut rates by 25bps
- Euro (EUR) is rising after strong gains
- Euro rises after mixed data
The Pound Euro (GBP/EUR) exchange rate is falling modestly lower after strong gains yesterday. The pair rose 0.65% in the previous session, settling on Wednesday at €1.2002 and trading in a range between €1919 and €1.2027. At 11:00 UTC, GBP/EUR trades -0.06% at €1.1995.
The pound is edging lower in cautious trade ahead of the Bank of England’s interest rate decision at 1200 GMT. The central bank is expected to cut interest rates by 25 basis points for a second time this year after reducing rates by 25 basis points in August when it kicked off its rate-cutting cycle.
The meeting comes as inflation in the UK cooled to 1.7% year on year in September, below the central bank’s 2% target. Meanwhile, wage growth and service sector inflation, which have been high, also showed signs of cooling.
With the rate cut priced in, attention will be on the outlook, particularly in light of Labour’s budget last week, which is expected to have an inflationary impact over the coming years.
The Bank of England is unlikely to guide out toward the December rate cut and may adopt A more cautious approach following the budget.
The euro is holding steady after steep losses yesterday as the dust settles on President Trump’s victory in the U.S. presidential elections.
Today, the focus is back on the economic calendar with mixed data from the region.
German industrial production was weaker than expected, falling 2.5% month over month in September after rising 2.6% in August. Expectations had been for a smaller drop of -1%. D4elving deeper into the data, automotive production tanked 7.8% in September after rising 15.4% in August.
Meanwhile, eurozone retail settles or is slightly stronger than expected, with sales increasing 0.5% month on month in September. This is double the 0.2% achieved in August and ahead of the 0.4% forecast. The data suggest that the consumer is holding up as inflation in the region cools and interest rates rise.
