- Pound (GBP) is falling to a level last seen the 2023
- UK retailers cut prices by 0.3% in October
- Euro (EUR) is rising despite weak German data
- German consumer confidence falls to an 8-month low
The Pound-Euro (GBP/EUR) exchange rate is falling for a second straight day. The pair fell 0.03% in the previous session, settling on Monday at €1.1450. It traded between €1.1440 and €1.1473. At 11:00 UTC, GBP/EUR trades -0.25% at €1.1421.
The pound has fallen to its lowest level since late 2023 as UK shop prices fall for the first time since March.
According to data from the British Retail Consortium, British retailers cut prices in October, led by the largest food price drop in almost 5 years. The data showed retailers reduced prices by 0.3% compared to September, the first month-on-month decline since March.
Food prices declined by 0.4%, marking the largest fall since December 2020. Annual food inflation was cooler at 3.7% compared to 4.2% in September.
The Bank of England will be watching food prices closely, as it believes they play a significant role in shaping public inflation expectations.
UK CPI is currently at 3.8% YoY, almost double the BoE’s 2% target. The central bank is expected to leave interest rates at 4% in its November meeting.
The EUR is rising despite weaker-than-expected German morale. The GFK consumer confidence index fell to -24.1 heading into November, downwardly revised -22.5 in the previous., Missing expectations of -22.
This marked the lowest reading since April, weighed down by a sharp decline in income expectations to 2.3 compared to 15.1 in October.
However, economic expectations rose for the first time in four months to 0.8, up from -1.4. Unwillingness to buy also improved.
Attention is turning to the ECB interest rate decision on Thursday, where the central bank is expected to leave interest rates unchanged for a third straight meeting at 2%. With inflation in the region it was 2.2% under a strong euro, keeping a lid on price increases, the central bank is not expected to cut rates again until well into next year.