EUR/GBP Climbs Above 0.8700 as UK Debt Rises, Euro Gains Strength
The euro (EUR) is showing strength against the British pound (GBP), with the EUR/GBP pair climbing above 0.8700 and trading near 0.8735 in early European hours.
The move comes as pressure builds on the UK economy. Britain’s public borrowing jumped to £18 billion in August, the highest monthly level in five years and well above forecasts of £12.8 billion. This sharp rise in debt has raised concerns about the UK’s financial stability and weighed on the pound.
Meanwhile, the euro found support from stronger Eurozone Consumer Confidence numbers. September’s reading came in at –14.9, improving from August’s –15.5 and beating expectations of –15.3. The data signals that households in the euro area are feeling less pessimistic, giving the euro a boost.
However, risks remain. Rising geopolitical tensions with Russia could still drag on Europe’s economy, especially with its heavy reliance on energy supplies.
Traders are now focused on the upcoming PMI data from both the UK and Eurozone. These reports are expected to offer fresh insight into business activity and the near-term outlook for both economies, which could drive the next move in the EUR/GBP exchange rate.
Impact:
EUR/GBP could extend gains if UK fiscal stress deepens or PMI numbers disappoint. A strong UK PMI, however, might support a short-term pound recovery.
