- Pound (GBP) is falling after modest gains yesterday
- Fiscal worries & talk of a political challenge to the PM hit GBP
- Euro (EUR) rises as German consumer sentiment improves
- Confidence hits the highest level since April
The Pound-Euro (GBP/EUR) exchange rate is resuming its slide after modest gains yesterday. The pair rose 0.06% in the previous session, settling on Tuesday at €1.1447. It traded between €1.1431 and €1.1473. At 10:00 UTC, GBP/EUR trades 0.04% at €1.1457.
The pound is edging lower amid a risk-off mood in the markets, following modest gains yesterday after comments from policymaker Megan Greene.
On Wednesday, Megan Green warned that, in light of uncertainty and risks, the Bank of England should adopt a cautious approach to further cutting interest rates. Megan Greene had opposed the 25-basis-point cut that was narrowly approved in a 5-to-4 decision in August.
Today, the mood towards the pound is cautious, and further gains in sterling could be limited due to fiscal concerns heading towards the November budget.
With inflation, sticky firms may be keen to cut costs, and with hiring becoming increasingly expensive, the outlook for growth is deteriorating.
Meanwhile, the pound is also under pressure amid a risk-off mood as talk of a political challenge to Prime Minister Sir Kier Starmer saw bond yields climb higher. Greater Manchester Mayor has reportedly been approached by several Labour MPs about replacing Starmer.
The euro is pushing modestly higher following the release of German sentiment data, which showed a slight improvement heading into October.
The GFK consumer sentiment index edged up to -22.3 in October from -23.5 in September, slightly topping expectations and marking its best level since April.
The improved sentiment comes amid rising optimism surrounding household incomes; the income expectation sub-index rose 11 points to 15.1. However, the headline figure remains deeply negative, indicating caution among households.
The data also showed that economic expectations declined for a third consecutive month, indicating caution surrounding persistent inflation and global tensions, which could slow. Any recovery very
