EUR/GBP eased back towards 0.8345 in early European trade as the euro softened after weak German consumption data. Destatis said German Retail Sales fell 2.0% month on month in September, versus a revised 1.2% rise in August, and below expectations for a 0.4% increase. On a yearly basis, sales were down 2.3%, compared with a revised 0.3% decline previously, while earlier stronger Q3 GDP readings for the Eurozone and Germany were cited as a potential brake on further euro losses.
Bank Of England Decision And UK Market Dynamics
In the UK, attention turns to Thursday’s Bank of England decision, with a Reuters poll looking for Bank Rate to rise to 4.0% from 3.75%, which would be the first increase since August 2023. UK rates were described as carrying a 20bp risk premium in 10-year gilt yields, with discussion of potential tightening in the gilt-bund spread and a budget deficit seen moving inside 4% of GDP. Separately, ECB’s Nagel registered 8.2/10 on the FXS Speechtracker versus a 6.9/10 historic average, while technicians flagged RSI (14) at 23 and chart levels at 0.8315, 0.8410, 0.8505 and 0.8535.
