The EUR/GBP pair is slightly lower, hovering around the 0.8520s as traders anticipate the release of Purchasing Manager Indexes (PMI) for both the Eurozone and the UK on Thursday. The pair has been on an upward trend since July, fueled by shifting monetary policy expectations in favor of the Euro.
With the European Central Bank (ECB) taking a data-driven approach and the Bank of England (BoE) considering interest rate cuts due to low inflation, the Pound Sterling has weakened against the Euro. This divergence in monetary policy is reflected in the comparison graph below.
Recent Macroeconomic Data Impact
In the Eurozone, the Current Account surplus has increased, indicating higher demand for the Euro due to strong exports. Additionally, Construction Output in the Eurozone is on the rise, with positive outlooks for the German economy. On the other hand, UK government borrowing has exceeded expectations, which could negatively impact the country’s fiscal position.
The rise in public borrowing in the UK could lead to tax increases or further borrowing, affecting the value of the Pound Sterling. The upcoming PMI data releases will provide further insight into the economic performance of both regions and could drive market movement for the EUR/GBP pair.