- Pound (GBP) is falling after losses yesterday
- BoE left rates unchanged at 4% after 5 cuts since August 2024
- Euro (EUR) rises amid a quiet economic calendar
- Germany passes a budget
The Pound-Euro (GBP/EUR) exchange rate is falling after gains in the previous day. The pair rose 0.22% in the previous session, settling on Wednesday at €1.1525. It traded between €1.1494 and €1.1551. At 17:00 UTC, GBP/EUR trades -0.2% at €1.1503.
The pound is falling after the Bank of England left interest rates unchanged at 4% in line with expectations. There were no surprises with the vote split, which was 7 to 2, with 7 policymakers voting to leave rates unchanged, whilst two voted for a 25 basis point rate reduction. This pause comes after a cut in August and after five cuts since August 2024.
The central bank also slowed the annual pace at which it sells gilts purchased between 2009 and 2011 to 70 billion from the current £100 billion in line with expectations.
With inflation almost double the central bank’s 2% target, and despite growing signs of weakness in the UK labour market, investors are only fully pricing in another rate cut by March next year.
The next key date for the Bank of England will be the finance minister Rachel Reeves’ budget on November 26th.
Currently, the UK is the most aggravating rare common economy in the developed world, thanks to a brutal mix of high inflation, still grace under rising unemployment.
The euro is gaining ground on Thursday despite a quiet economic calendar. Germany’s parliament approved the nation’s first annual budget since sweeping reforms earlier this year to loosen fiscal rules.
The 2025 budget will allow for total investments of almost €116 billion, made possible thanks to a €500 billion infrastructure fund, as well as an exemption from debt rules for defence spending.
Germany has brought to an end decades of fiscal conservatism in the hopes that public investment could kickstart the stalling economy and boost the defence budget, which aims to secure military support for Ukraine while also meeting the ambitious spending targets for NATO allies.
