- Pound (GBP) is falling after losses last week
- UK Q3 GDP eased to 0.1% QoQ in Q3
- Euro (EUR) is rising but gains could be limited
- ECB President Lagarde is due to speak later today
The Pound Euro (GBP/EUR) exchange rate is falling modestly after losses last week. The pair fell 0.7% in the previous week, settling on Friday at €1.1968 and trading in a range between €1.1967 and €1.2093. At 12:00 UTC, GBP/EUR trades -0.13% at €1.1974
The pound is falling lower, adding to losses on Friday, as the market continues to weigh up weaker UK economic growth and concerns regarding the impact of the recently unveiled Budget.
Data on Friday showed that the UK economy contracted unexpectedly in September, and growth slowed to a stall in the third quarter of the year.
UK GDP was -0.1% month on month in September and slowed to 0.1% in the July talk to October quarter slowing from 0.5% growth in the second quarter. This was also below forecasts of 0.2%
The data will be disappointing for Chancellor Rachel Reeves, who announced the budget in October, which some fear could do more damage to the UK economy than good.
Meanwhile, other data showed that Britons started new businesses at the slowest rate since 2010. These figures could provide warning signs for the UK’s economic growth and productivity over the longer term.
The number of new businesses started fell to 316,000 in 2023, down from 337,000 in the previous year.
However, fewer businesses also closed, with 309,000 shutting in 2023, down from 349,000 in the previous year.
Even So, most economists see the falling rate of business creation as bad news for economic growth and productivity.
The euro is rising against the pound, but gains could be limited given the region’s weak economic outlook and ECB rate cut expectations.
The European Central Bank is widely expected to cut interest rates again in the December meeting, and the market is considering that the central bank may even cut rates by an outsized 50 basis points.
Inflation in the region is below the central bank’s 2% target, and growth is anemic at best. This week, eurozone inflation data and business activity data will provide more clues about what to expect from the central bank.
Today, the economic calendar is quiet; however, ECB president Christine Lagarde is due to speak and could offer further clears over the. The future path for rate