The pound euro (GBP/EUR) exchange rate is rising after four straight weeks of declines.
The pound is stabilizing after last week’s losses, driven by weak UK data and nerves ahead of Chancellor Rachel Reeves’ upcoming budget.
Rising unemployment and softer-than-expected Q3 GDP boosted expectations of a 25 bps Bank of England rate cut in December. Reports that Chancellor Reeve would not raise income tax have unnerved the market.
The euro is slipping despite upgraded EU growth forecasts. The European Commission lifted GDP forecast for 2025 to 1.3% from 0.9%, but lowered growth forecasts for 2026. Attention now turns to Friday’s PMIs.