The pound-euro (GBP/EUR) exchange rate is falling for a second consecutive day to €1.1440.
The pound is dropping towards a 2-month low after UK PMI data showed a sharper-than-expected slowdown in business activity.
The composite PMI fell to 51 in September from 53.5, while manufacturing dropped to 46.2, signaling contraction.
With inflation still high at 3.8%, the UK faces stagflation, adding pressure ahead of Chancellor Rachel Reeves’ November budget.
The euro is rising as the eurozone services PMI rose to 51.4, a nine-month high.
The data comes as the ECB has left rates unchanged for two consecutive meetings, with inflation remaining at 2%. If growth holds up, the ECB could be at the end of its rate-cutting cycle.