- Pound (GBP) is rising for s third day
- BoE left rates at 4% but could cut rates in December
- Euro (EUR) fell on Friday but rose across the week
- German trade surplus fell to €15.3 billion
The Pound-Euro (GBP/EUR) exchange rate rose on Friday for a third day. The pair rose 0.18% in the previous session, settling on Thursday at €1.1376. It traded between €1.1337 and €1.1382. At 17:00 UTC, GBP/EUR trades 0.03% at €1.1379. The pair fell -0.19% across the week.
The pound fell against the euro and the US dollar for a third straight week as investors continued to digest the Bank of England’s interest rate decision, whilst looking ahead to the government’s budget at the end of this month.
A narrow vote split signalled that Bank of England Governor Andrew Bailey could soon join those favouring a rate cut, raising expectations that the central bank will cut rates again in December.
The markets are now expecting the UK government to unveil tax hikes and spending cuts in its autumn budget, potentially creating more space for the Bank of England to cut rates further next year.
In the coming week, UK jobs and GDP data will be in focus, providing further clues on how the UK economy and jobs market are holding up ahead of the budget.
The euro fell on Friday but gained against the pound across the week, supported by the view that the European Central Bank has ended its rate-cutting cycle.
On Friday, it was shown that the German trade surplus fell to an 11-month low in September as imports jumped 3.1% and exports to the US rebounded but remained down on an annual basis.
Seasonally adjusted exports rose 1.4% month on month to €131.1 billion while imports jumped 3.1% to €115.9 billion. This brought the monthly trade surplus down to €15.3 billion compared with €16.9 billion in August and €18 billion a year earlier.
While German exports rose 2% from September 2024, import volumes rose more decisively, up 4.8% year on year. The data suggests that domestic demand is showing resilience even as the global demand picture remains mixed.
