- Pound (GBP) retakes €1.17 despite Brexit, fuel concerns
- UK services PMI due
- Euro (EUR) declined after economic sentiment dropped to 6 month low
- Eurozone composite PMI & PPI data due.
The Pound Euro (GBP/EUR) exchange rate is heading higher for a fifth straight day. The pair settled 0.15% higher on Monday at €1.1709 just off the high of €1.1723 reached earlier in the session. At 05:45 UTC, GBP/EUR trades +0.09% at €1.1719.
The Pound is showing resilience despite growing headwinds. At the ruling Conservative party conference in Manchester Prime Minister Boris Johnson said that he does not intend to ease immigration rules to alleviate fuel shortages in the UK. Petrol stations across the UK, but particularly in the South East continue to see shortages of fuel or remain empty. A shortage of fuel at petrol stations could bring the UK to a standstill and derail the ongoing economic recovery. Boris Johnson prefers the UK to adjust to Brexit rather than resolve the problems, which the market may not like.
Brexit is another issue facing the UK. The Chief Brexit negotiator has threatened to trigger Article 16 of the Northern Ireland protocol as Britain steps up demands to renegotiate the protocol. Article 16 is like an emergency brake and allows either side to take unilateral action.
Today the economic calendar will be in focus with the release of services PMI data for September. This is the final reading and are expected to confirm 54.6, the flash reading.
The Euro slipped versus the Pound in the previous session as Eurozone Sentix investor sentiment worsened to 16.9 in October, a big miss from the 19.0 expected. This was a six-month low and comes as it appears that the economic recovery is starting to falter amid supply chain disruptions, the energy crisis and labour shortages.
Today investors will be looking towards the release of the final Eurozone composite PMI reading for September, which is expected to confirm 56.1 down from 59 in August.
Separately Eurozone PPI will be in focus. The measure of inflation at wholesale level is expected to rise 1.3% month on month in August after rising 2.3% in the previous month.