- Pound (GBP) is rising after 2-days of losses
- BoE – ECB monetary policy divergence supports the pair
- Euro (EUR) falls despite German consumer confidence
- ECB President Lagarde to speak later today
The Pound Euro (GBP/EUR) exchange rate is rising after two days of losses. The pair fell -0.24% in the previous session, settling on Wednesday at €1.1966 and trading in a range between €1.1942 and €1.2003. At 15:00, GBP/EUR trades 0.17% at €1.1986.
The pound is pushing higher, boosted by the risk on mood and the broader financial market.
News that China is pledging more stimulus to support its slowing economy has lifted risk sentiment across the globe.
The news from China comes after the People’s Bank of China unveiled its largest stimulus package since the pandemic earlier in the week.
Meanwhile the pound is also being supported by BoE- ECB monetary policy divergence. Bank of England policymaker Megan Greene yesterday warned over the Bank of England cutting interest rates too quickly. How comments echo those of BoE governor Andrew Bailey earlier in the week.
Still, gains in the pound might struggle to push too much further amid rising concerns over what the Chancellor of the Exchequer may unveil in the budget at the end of October.
Prime Minister Keir Starmer has warned that the budget will be painful, suggesting that tax hikes are coming, which could slow the UK economy.
There is no high-impacting UK economic data due to be released today; instead, sentiment will drive the sterling.
The euro is under pressure amid rising concerns over the outlook of the eurozone economy and ahead of a speech by ECB president Christine Lagarde.
German GfK consumer confidence showed signs of improving in October marking the first increase in consumer morale since June. However, other data from Germany this week have been disappointing, raising concerns that the eurozone’s largest economy could be heading for a recession. Both IFO business climate and business activity data have pointed to a contraction.
Looking ahead, attention is on ECB President Lagarde, who is due to speak shortly and whose comments will be watched closely for clues about the outlook for the economy and the future path for interest rates.
