- Pound (GBP) falls as UK corporate results disappoint
- Cracks appear in the housing market
- Euro (EUR) rises after a bout of upbeat data
- ECB speakers in focus
The Pound Euro (GBP/EUR) exchange rate is falling for a second straight day. The pair fell -0.3% yesterday, settling at €1.1449 after trading in a range between €1.1434 – €1.1508 across the session. At 08:45 UTC, GBP/EUR trades -0.4% at €1.1401.
The pound trades under pressure amid rising concerns over the health of the UK economy. Corporate results from bellwether Marks and Spencer and from house builders Taylor Wimpey and Persimmon have highlighted the struggles facing the economy. Consumer confidence is at historic lows and cracks are appearing in the housing market as mortgage rates rise.
Yesterday the Bank of England’s chief economist Huw Pill warned over the health of the UK economy and said that the risks brought by inflation are far from under control. Huw Pill also said that the UK is expected to enter into a recession which is clouding the outlook further.
His comments come after the BoE raised interest rates by 75 basis points last week, the largest rate hike in 33 years, taking the interest rate to 3%.
Looking ahead, there is no high impacting UK economic data today. Attention will shift to Friday’s GDP data for the third quarter, which is expected to show that the UK economy contracted possibly by as much as 0.5%.
The euro is edging higher, extending gains from the previous session. Recent data from the region has been upbeat with retail sales, German industrial production and eurozone investors confidence all coming in ahead of forecasts.
Even so, the outlook for the eurozone economy remains bleak as inflation sits at record highs and growth is expected to slow considerably. PMI data already shows a contraction.
There is no high impacting eurozone data due to be released today. Attention will be on ECB speakers and their outlook for inflation, growth and the path of interest rates.