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Mixed as UK Budget Rumours Swirl
Euro (GBP/EUR) exchange rate wavered on Wednesday morning amid mixed feelings surrounding the UK government’s . At the time of writing, GBP/EUR traded at around €1.1933, having fluctuated in a narrow range.
Pound (GBP) Uncertain amid UK Borrowing Plans
The Pound (GBP) was mixed on Wednesday as a lack of UK data left GBP investors focusing on the coming Autumn Budget. Markets have been anxious that the budget – which will be unveiled later this month – will contain tax rises and spending cuts. However, it has emerged that Chancellor Rachel Reeves will change the government’s fiscal rules, allowing it to borrow billions of pounds more for infrastructure investment. While there are concerns that this could potentially lead to unsustainable debt, there are also hopes that it means the budget will be focused on boosting growth. These mixed feelings and the anticipation surrounding the budget saw GBP waver on Wednesday.
Euro (EUR) Flat despite Strong German Trade Figures
Meanwhile, the Euro (EUR) initially enjoyed support on Wednesday after stronger-than-forecast German trade figures. New data showed that the Eurozone’s largest economy saw its trade surplus widen more than anticipated in August, with export growth unexpectedly remaining in positive territory. However, bets put some pressure on the common currency, stifling its upside.
GBP/EUR Exchange Rate Forecast: ECB Meeting Minutes to Dent the Euro?
Looking ahead, the focus on Thursday is likely to be the ECB’s September policy meeting minutes. Markets broadly expect the ECB to press ahead with two more interest rate cuts in October and December amid signs of weakness in the Eurozone economy. If the minutes reinforce these expectations, the single currency could slide. UK data remains in short supply until Friday, when the latest British GDP figures are due out. Could an expected recovery in UK economic growth in August lift the Pound at the end of the week?
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