- Pound (GBP) is unchanged after gains yesterday
- BoE left rates at 4% but the vote was tighter than expected
- Euro (EUR) is flat despite weak data
- Eurozone retail sales fell -0.1% MoM
The Pound-Euro (GBP/EUR) exchange rate is unchanged after gains yesterday. The pair rose 0.12% in the previous session, settling on Wednesday at €1.1355. It traded between €1.1324 and €1.1367. At 17:00 UTC, GBP/EUR trades 0.01% at €1.1358.
The pound is unchanged against the euro after the Bank of England left interest rates unchanged at 4% for a second straight month, in a tighter-than-expected vote that paves the way for a December cut.
Five members of the Monetary Policy Committee voted to leave rates unchanged, with Governor Andrew Bailey holding the swing vote; four voted for a 25 basis point rate cut to 3.75%. This was closer than the expected six-to-three vote count.
This comes after UK inflation, which had been cooling, was cooler than expected at 3.8% year on year in September, below the central bank’s forecast peak of 4%.
In the statement, the Bank of England altered its guidance, removing the word ‘careful’ from its language on future cuts, indicating that more rate cuts were coming if the disinflation process continued.
The dovish stance of policymakers means the Bank of England will have time to digest the UK budget on the 26th of November before deciding whether to cut rates in December.
The euro was unchanged despite weaker-than-expected eurozone retail sales data. Retail sales fell 0.1% Month on month in September, in line with the 0.1% decline in August and defying expectations of an increase to 0.2%.
The weak sales come despite a recovery in consumer confidence and positive real wage growth. Since 2023, eurozone consumers have seen a recovery in purchasing power as negotiated wage growth started to outstrip inflation. However, this is yet to show you through on the eurozone shopping streets.
Today’s weak data comes after stronger-than-expected PMI figures yesterday. The compsite PMI, which serves as a good gauge for business activity, recovered to a two-year high.
