ExchangeRates.org.uk - At time of writing GBP/EUR was trading at around €1.2002. Virtually unchanged from Tuesday’s opening levels. The Euro (EUR) faced resistance on Tuesday, following the publication of the Eurozone’s latest consumer price index. The preliminary CPI figures reported inflation in the bloc cooled to just 1.8% in September. This was down from 2.2% in August and below forecasts for a more modest deceleration to 1.9%. This was also the first time that inflation had fallen below the European Central Bank’s 2% target since June 2021. However, with most EUR investors having already priced in another ECB rate cut this month, following Monday’s much weaker-than-expected German inflation figures, the downside in the Euro was ultimately limited on Tuesday.
Pound (GBP) Muted as UK Factory Activity Slows
The Pound (GBP) struggled to attract support on Tuesday as the UK’s latest manufacturing PMI confirmed that growth in the factory sector fell to a three-month low in September. Data published by S&P Global reported the UK’s manufacturing PMI fell from 52.5 to 51.5 last month, in line with the preliminary estimate. The survey highlighted how the outlook for UK manufacturers is deteriorating, with business optimism slumping to a nine-month low amid uncertainty over the new government’s Autumn Budget. In addition, the Pound was also pressured on Tuesday as the UK energy price cap rose by 10% at the start of October, with GBP investors fearing this could cause consumers to rein in their spending in the coming months.
GBP/EUR Forecast: Dovish ECB Comments to Pile Pressure on the Euro?
Looking ahead, EUR investors will be looking to speeches but several ECB policymakers for fresh impetus on Wednesday. ECB Vice-President Luis de Guindos is likely to be the most influential of these speakers, with his comments potentially bolstering the Pound Euro exchange rate if he concedes that an October rate cut is possible. Meanwhile, in the absence of any notable UK economic data, movement in the Pound may be driven primarily by market sentiment. If investors remain cautious this could see Sterling come under pressure in mid-week trade.
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