EUR Hovers Near Three-Month Highs Against GBP Amid Weak German Data

The Euro has hovered near three-month highs against the British Pound despite weak German consumer confidence data. The EUR/GBP pair stands above 0.8600 after hitting a fresh high of 0.8610, with a weekly gain of 0.37%. The downbeat data showed consumers' confidence for October fell to -30.6, its worst reading in five months, from -26.6 the previous month.

The GfK report highlights that rising energy prices are eating up households' disposable income, and this feeling is expected to extend into coming months. As a result, consumers' willingness to save has increased to 21.5 from 15.5 in the previous month, while their purchasing plans have declined.

The Pound has been on its back foot since UK Public Sector Net Borrowing data overshot estimates, reviving concerns about fiscal stability. Strategists at Brown Brothers Harriman highlight a growing disconnect between market expectations and their own view of the Bank of England's policy path, suggesting that the BoE may not need to tighten as much as markets expect.