- Pound (GBP) is unchanged after gains yesterday
- UK inflation data is due tomorrow
- Euro (EUR) awaits German economic sentiment figures
- ECB lowered the eurozone growth forecast
The Pound Euro (GBP/EUR) exchange rate is holding steady after gains yesterday. The pair rose 0.20% in the previous session, settling on Monday at €1.1870 and trading in a range between €1.1843 and €1.1876. At 09:00 UTC, GBP/EUR trades 0.1% at €1.1870.
The euro is unchanged on Tuesday as investors looked ahead to German economic sentiment data. Economists expect economic sentiment to deteriorate further in September, dropping to 17 spots from 19.2. Weaker-than-expected economic sentiment could raise concerns over the health of the economy and the prospects of a recession in Germany.
The data comes after the European Central Bank cut interest rates by 25 basis points last week, lowering the benchmark rate to 3.5%. The ECB also downwardly revised its growth forecast. A sharp deterioration in economic sentiment and rising recession fears may encourage the ECB to cut rates at a faster pace.
The data comes after ECB chief economist Philip Lane said yesterday that the central bank should keep gradually cutting interest rates.
The market sees a 25% chance of the ECB cutting interest rates again in the October meeting.
The pound was unchanged on Tuesday amid a quiet economic calendar. Instead, the focus is on Prime Minister Sir Kier Starmer who said that his government’s first budget in October wouldn’t undermine his growth goals.
His comments come after the Prime Minister warned last month that the budget could be painful for some, hinting towards tax increases.
Looking ahead, attention will turn to tomorrow’s inflation data, which is expected to show that CPI remained at 2.2% year on year in August, in line with July.
