- Pound (GBP) is rising for s second day
- UK house prices fell -0.3% MoM in September
- Euro (EUR) falls for a second day
- French political worries remain
The Pound-Euro (GBP/EUR) exchange rate is rising for a second straight day. The pair gained 0.40% in the previous session, settling on Monday at €1.1515. It traded between €1.1452 and €1.1532. At 10:00 UTC, GBP/EUR trades 0.04% at €1.1519.
The euro is falling further on Tuesday, extending losses from yesterday amid ongoing concerns surrounding the political and fiscal position of France.
French Prime Minister Sebastien Lecornu surprised the market yesterday, resigning after just 27 days in office, becoming the shortest-serving Prime Minister in French modern history.
President Macron has tasked Lecornu with two days of final negotiations to find a solution to the political deadlock and to bring some sense of stability to the country. However, opposition leaders are calling for a snap election.
Successive prime ministers have struggled to push through a budget in France that cuts spending and raises taxes to reduce the budget deficit.
Separately, ECB president Christine Lagarde said yesterday that the disinflation process is over. However, Vice President Luis de Guindos warned that political risks and weak domestic growth mean that the possibility of another rate cut remains on the table.
Data today showed that German factory orders unexpectedly declined, dropping 0.8% month-on-month in August, defying expectations of a 1.4% rise.
The pound is drifting higher despite data showing that UK house prices fell in September.
According to Halifax data, UK house prices declined 0.3% month-on-month in September, marking the first decline since May. The data suggest that fears of rising taxes and dampened demand from prospective homebuyers are hurting market sentiment.
The mood in the UK is turning cautious amid rising speculation that Chancellor Rachel Reeves will raise taxes in the budget on November 26 to get the UK public finances back on track. This comes as the market is still adjusting to the increased stamp duty introduced earlier this year.
