- Pound (GBP) is rising for a fifth day
- UK PM Starmer & Chancellor Rachel Reeves plot growth initiatives
- Euro (EUR) falls as German consumer confidence falls
- ECB rate decision is tomorrow
The Pound Euro (GBP/EUR) exchange rate is rising for a fifth straight day. The pair rose 0.14% in the previous session, settling on Tuesday at €1.1926. It traded in a range between €1.1905 and €1.1938. At 10:00 UTC GBP/EUR trades 0.06% higher at €1.1933.
The pound is inching higher after positive comments from UK Prime Minister Keir Starmer regarding the growth outlook and as the market awaits her speech term chancellor Rachel Reeves.
Reeves is expected to unveil a new productivity drive, including initiatives such as a scheme to better link Oxford and Cambridge and plans for new rail projects and reservoirs.
However, her speech comes against a gloomy backdrop: growth stalled across the second half of last year, and business confidence fell following the tax hikes in the October budget.
The UK economic calendar remains quiet, with no major releases due this week. Instead, attention will turn to the Bank of England interest rate decision next week, when the central bank is widely expected to cut rates by 25 basis points.
The euro trades under some pressure after German consumer sentiment deteriorated in February.
The closely watched GfK consumer confidence index unexpectedly fell to -22.4, down from -21.4 in January. This was below expectations of -20 and amid a deterioration in both economic and income expectations.
The data highlights the struggles in the eurozone’s largest economy, where growth has stalled and political uncertainty continues.
Attention now turns to the European Central Bank rate decision tomorrow. The central bank is expected to reduce interest rates by 25 basis points further. Policymakers are also expected to signal further interest rate cuts across the year as inflation remains close to the 2% target and growth shows signs of stalling. The rate cut is fully priced in, so comments from ECB President Lagarde will drive the EUR.
