- Pound (GBP) is falling for a second day
- UK manufacturers’ outlook deteriorates
- Euro (EUR) rises for a second day
- Eurozone consumer confidence brightens to -14.2
The Pound-Euro (GBP/EUR) exchange rate is falling for a second straight day. The pair fell 0.22% in the previous session, settling on Wednesday at €1.1502. It traded between €1.1475 and €1.1536. At 16:00 UTC, GBP/EUR trades -0.22% at €1.1476.
The pound is falling against the euro as UK manufacturers see the weakest outlook for orders since 2020.
According to the Confederation of British Industry, the monthly order book index dropped to -38 in October, down from -27 in September, and remains below a long-running average of -14. This month’s data marked the lowest level since last year.
Not only was the quarterly order data showing the largest decline in domestic and export orders since the pandemic, but expectations over the coming 12 months are also at the lowest since April 2020.
These figures come ahead of the finance minister, Rachel Reeves’ budget on November 26, amid concerns that the government will hike taxes and cut spending.
The euro is rising after Eurozone consumer confidence unexpectedly improved in October. Consumer sentiment rose to -14.2 in October, up from -14.9 in September. Improved consumer sentiment often goes hand in hand with higher spending, which is good news for the economy.
Attention will now turn to eurozone PMI data tomorrow, which is expected to show that business activity remained in modest expansion at 51, down from 51.2, with a level of 50 separating expansion from contraction. Stronger-than-expected data could lift the EUR.
The EUR is broadly supported by expectations that the ECB will not cut interest rates again anytime soon. Yesterday, ECB Vice President Luis de Guindos said that current interest rates are adequate, given that inflation is close to the ECB’s 2% target.
ECB policymakers are now in the blackout period ahead of next week’s policy meeting.