GBP/EUR Exchange Rate Dropped as Investors Remain Concerned with UK Economy
The Pound Euro (GBP/EUR) exchange rate fell after Prime Minister Liz Truss failed to inspire confidence in the UK government’s fiscal plans.
At time of writing the GBP/EUR exchange rate is around €1.1248, a 0.46% fall from this morning.
Pound (GBP) Slipped in Wake of PM Liz Truss’ Conservative Party Speech
The Pound wiped out a lot of the gains it made in the wake of the tax cut U-turn and the Bank of England (BoE) intervention.
Prime Minister Liz Truss took to the stage at the Conservative Party conference and closed the annual gathering with a speech. In the hopes of restoring some stability and confidence in the Tory party, investors were not as impress as the Pound slumped immediately after. Proclaiming she stands for ‘growth, growth and growth’, the market remains cautious over how the sweeping tax cut plans will be funded.
Weighing further on the Pound was the stalling of the service sector. Despite upwardly revised to 50 from a preliminary 49.2, avoidance of a contraction still points to the lowest reading in 19 months. Inflationary pressures continue to wreak havoc in the service sector and doesn’t bode well going forward.
Looking ahead, manufacturing PMIs are due to print tomorrow. An expected reading of 48 would indicate a third consecutive month of contraction. Falling business confidence and customer demand could see the lowest reading since May 2020.
Euro (EUR) Climbed Despite Contracting PMIs Across the Eurozone
The Euro (EUR) is under pressure against most of its rivals today in the wake of downbeat services PMI.
Contractions in the service sector in the Eurozone are weighing on the single currency amid inflationary pressures and lingering economic uncertainty. Coming in lower than the preliminary 48.9, services PMI showed the sharpest decline as it printed at 48.8 for September. Meanwhile, Germany, Europe’s biggest economy, also followed suit and contracted for the third consecutive month.
Looking ahead to tomorrow, construction PMIs and retail sales are likely to weigh on the Euro. Expected falls across the board in both the construction and retail sector could see the single currency slide. Meanwhile, geopolitical tensions are likely to remain in the peripherals of EUR investors as negative news out of Ukraine could weigh on the Euro.
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