- Pound (GBP) is rising, recovering from last week’s losses
- UK retail sales rose 0.5%, composite PMI jumped to 51.1
- Euro (EUR) is falling despite upbeat German data
- German IFO business morale brightens
The Pound-Euro (GBP/EUR) exchange rate is rising after losses last week. The pair fell 0.62% in the previous week, settling on Friday at €1.1451. It traded between €1.1430 and €1.1536. At 15:00 UTC, GBP/EUR trades +0.1% at €1.1461.
The pound is rising on Monday, recovering some of last week’s losses, after the UK economy showed signs of resilience ahead of next month’s budget.
Data on Friday shows that business activity unexpectedly rose in October after almost contracting in the previous month.
The composite PMI, which gauges the country’s services, manufacturing, and construction sectors, rose to 51.1 in October. This was significantly ahead of the 50 level, which economists had expected. Still, companies are clearly treading cautiously with spending, investment, and hiring ahead of Chancellor Rachel Reeves’ budget in late November.
Separately, retail sales in September showed a surprise 1.5% increase, defying expectations of a 0.2% MoM rise. Sales were helped by demand for new iPhones and for gold from online jewellers.
Last week was a pretty good week for UK economic data. The economic calendar is quieter this week with no major releases.
The euro is falling against the pound but rising against the US dollar after upbeat German business sentiment.
The latest German Ifo business survey showed that morale rose in October, reaching 88.4, up from 87.7 in September and ahead of forecasts of 88, raising hopes of an upturn.
The data showed that expectations are improving across all sectors, such as industry, construction, and services.
The data comes as the eurozone’s largest economy has struggled to regain momentum this year, contracting 0.3% quarter on quarter in the second quarter.
The German government expects growth of 0.2% this year. But has predicted a strong economic rebound, with growth of 1.3% in 2026.
Looking ahead, the ECB rate decision this week. The central bank is not expected to cut rates and is likely to leave rates unchanged well into next year.
