- Pound (GBP) is flat after gains yesterday
- UK PSBN was £17.4 billion in October
- Euro (EUR) is unchanged after recent losses
- ECB Villeroy points sees more rate cuts coming
The Pound Euro (GBP/EUR) exchange rate is rising for a third day. The pair rose 0.25% in the previous session, settling on Wednesday at €1.1996 and trading in a range between €1.1958 and €1.2028. At 14:00 UTC, GBP/EUR trades +0.06% at €1.2003.
The pound is trading virtually unchanged after gains in the previous session and as data showed that Britain borrowed more than expected in October.
According to the latest data from the Office for National Statistics, public sector net borrowing (PSNB) was £17.4 billion in October, above forecasts and the second-largest October borrowing total since records started in 1993.
The data means that Chancellor Rachel Reeves has little wriggle room with regard to increasing spending on public services.
The data also showed that borrowing totalled £96.6 billion over the first seven months of the tax year, which is £1.1 billion more than the same period last year.
Above-inflation pay increases in the public sector are starting to show through, with day-to-day spending up over 5% and staff costs up 13.5% in October alone.
The data comes off the chancellor Rachel Reeves announced big tax increases in the Autumn Budget.
Meanwhile, the euro is trading flat against the pound but under pressure against the US dollar as investors weigh up the prospect of trade tariffs from incoming US president Trump and rising geopolitical tensions between Russia and Ukraine.
ECB policymaker Villeroy de Gallo adopted a dovish tone, saying he expects little inflation impact from possible Trump tariffs and believes the central bank should continue to lower its interest rates.
The market expects the ECB to cut rates by 25 basis points in the December meeting.
As far as data is concerned, attention now turns to consumer confidence figures, which are expected to show that consumer sentiment improved very modestly to -12.4, up from -12.5.
ECB chief economist Philip Lane is due to speak later today and could offer further insight into the ECB’s path for interest rates.