Pound Euro Exchange Rate News: GBP/EUR Choppy ahead of UK Autumn Budget

October 28, 2024 - Written by David Woodsmith

STORY LINK Pound Euro Exchange Rate News: GBP/EUR Choppy ahead of UK Autumn Budget

The Pound Euro (GBP/EUR) exchange rate was mixed on Monday as investors braced for the UK Autumn Budget and some high-impact Eurozone data.

At the time of writing, GBP/EUR traded at €1.2000, having wavered in a narrow range.

The Pound (GBP) fluctuated on Monday as markets prepared for the imminent UK Autumn Budget.

The Labour government’s highly anticipated budget has kept GBP investors on edge for weeks, with concerns about potential tax increases and spending cuts counterbalanced by expectations of increased investment.

Given this ongoing uncertainty and the budget's potential to spark significant volatility in the Pound, investors were cautious about making substantial bets on GBP on Monday.

At the same time, a brightening market mood provided some support to the increasingly risk-sensitive UK currency, helping to mitigate potential losses.

Meanwhile, the Euro (EUR) drew some support on Monday due to its strong inverse relationship with a weakening US Dollar (USD).

The safe-haven American currency was losing ground amid an improving market mood and a decline in US Treasury yields, with USD weakness bolstering EUR.

However, the cautiously optimistic market sentiment also kept the safer Euro from appreciating significantly against the riskier Pound.

Looking ahead, Germany’s upcoming consumer confidence report, scheduled for Tuesday morning, could influence the Euro. If consumers in the Eurozone’s largest economy maintain a deeply pessimistic outlook heading into November, the shared currency may face challenges.

Wednesday’s events are set to bring notable volatility. In the Eurozone, the bloc’s latest GDP figures and German inflation data will be released. Weak Eurozone growth in the third quarter could weigh on the Euro, while a rise in German inflation might lend it support.

For the Pound, Wednesday’s Autumn Budget announcement will be the main focus. A favourable reception to the budget could boost Sterling, while concerns about tax hikes or rising borrowing costs could dampen GBP. Regardless, investors can expect volatility as they process the government’s tax and spending plans.

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TAGS: Pound Euro Forecasts