- Pound (GBP) falls after BoE
- UK PMI data is due
- Euro (EUR) awaits business activity data
- Eurozone consumer confidence falls
The Pound Euro (GBP/EUR) exchange rate is falling for a third straight day. The pair fell -0.39% in the previous session, settling on Thursday at €1.1531 and trading in a range between €1.1500 – €1.1594. At 06:35 UTC, GBP/EUR trades +0.03% at €1.1526.
The pound fell to a fresh monthly low against the euro in the previous session and to a six-month low against the US dollar after the Bank of England surprised the market by keeping interest rates on hold For the first time in two years. The monetary policy committee voted five to four in favour of leaving rates unchanged, reflecting how tight the decision was.
The move by the Bank of England came after you can inflation unexpectedly cooled in August and amid growing evidence that the economy is heading for an economic downtown.
There was no press conference following the rate decision, but Bank of England governor Andrew Bailey highlighted in the Statement that inflation had fallen sharply in recent months and said that it Is expected to continue cooling.
Looking ahead attention is now turning to UK PMI data, which is expected to show that manufacturing and services contracted again in September, remaining below the key 50 level. The manufacturing PMI is expected to remain at 43 in September for a second month, whilst the services PMI is expected to fall to 49.2, down from 49.5.
The euro rose against the pound despite eurozone consumer confidence deteriorating further in September. The gauge for consumer sentiment fell to -17.5, down from -16 in August. Falling consumer morale comes as households deal with the impact of 10 straight interest rate hikes from the ECB and look toward a potential recession later this year.
Looking ahead, attention is on Eurozone PMI data, which is expected to show a continued contraction in the region in September. Both manufacturing and the service sector are expected to contract at a faster pace.
