GBP/EUR: Will UK Inflation Data Lift Pound vs. Euro?

The British pound is lower against the euro on Friday.

  • UK government borrowing rises to 100% of GDP
  • May UK retail sales beat expectations
  • EU Summit: Recovery fund remains elusive
  • Pound-euro exchange rate lower by -0.81% this week

GBP/EUR was lower by 36 pips (-0.32%) to 1.1051 as of 3pm GMT.

The currency pair was steady just under 1.11 but suddenly dipped to just above 1.10. Yesterday the exchange rate lost -0.69%.

GBP: UK government debt spikes

The euro got the edge over the pound on Friday. The pound is on course for its fifth decline in six days in an ongoing stretch of weakness that started before and continues after this week’s Bank of England meeting.

UK retail sales for May surprised on the upside, rising +12.0% instead of the +6.3% expected but had little in the way of a positive impact on Sterling. On an annual basis, excluding auto sales and fuel, retail sales are down -9.8% on a year-over-year basis.

Some of the lack of positive impetus in the pound might stem from the UK’s growing debt burden. UK May public sector net borrowing was £54.5 billion versus £49.3 billion expected. That meant borrowing reached over 100% of GDP for the first time since the 1960s.

EUR: Leaders ‘not moving’ on EU Recovery fund

German Chancellor Angela Merkel had already set the bar pretty low for today’s EU Summit, saying she did not expect a deal on the EU Recovery fund until later in the summer. The red lines are clearly drawn out and so far nobody is stepping over.

France and Germany have supposedly put their backing behind the IMF’s €750 billion mix of loans and grants. The so-called ‘frugal four’ nations want the fund to be exclusively loans and for the total to be smaller. Spain and Italy as well as other likely beneficiaries of the fund are pushing for no new loans.

Merkel for her part, appears to understand the gravitas of the situation telling her fellow leaders that there will be “very, very difficult times” if the fund under-delivers. is a news site only and not a currency trading platform. is a site operated by TransferWise Inc. ("We", "Us"), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.