- Pound (GBP) is rising, resuming its upward trend
- OECD upwardly revised UK GDP to 1.7%
- Euro (EUR) is falling government is on the brink of collapse
- PM Barnier faces a vote of no-confidence tomorrow
The Pound Euro (GBP/EUR) exchange rate is rising after a flat finish yesterday. The pair ended unchanged in the previous session, settling on Tuesday at €1.2055 and trading in a range between €1.2054 and €1.2067. At 16:00 UTC, GBP/EUR trades 0.11% at €1.2071.
The pound is rising, resuming its upward trend after an upward revision to PMI data and following and an upward revision to growth forecasts from the OECD.
The OECD now estimates that the UK economy will grow by 1.7% in 2025, highlighting its resilience to global economic uncertainties.
The output revision comes amid cooling inflation, a solid UK labour market, and a rise in real household income, which is helping to drive domestic demand back to pre-pandemic levels.
However, the OECD also said that inflation won’t cool as quickly as previously expected owing to the recent Labour government Budget.
Meanwhile, UK PMI data showed that the service sector cooled in November, but not as much as initially feared. The services PMI fell to 50.8 in November from 52 in October.
The euro is heading lower, as the French political drama continues. French Prime Minister Michel Barnier faces a vote of no confidence after pushing the Budget through Parliament without a vote. Barnier is not expected to survive the vote, which could result in more elections and ongoing political instability in France.5
Political instability in the region comes as the economic outlook remains weak. Eurozone business activity contracted again in November, falling to a 10-month low as stagflation concerns loom. The composite PMI dipped to 48.3 from 50 in October.
France and Germany, the bloc’s largest economies, reported composite levels of 45.9 and 47.2, respectively. Meanwhile, the price component rose for a second straight month, raising concerns over stagflation.
