- Pound (GBP) pares some gains from previous session even amid signs of consumer demand returning with retailers less inclined to slash prices
- Brexit uncertainties remain
- Euro rebounds despite ECB’s Yannis Stournaras highlighting that risks to the euro area are tilted to the downside
- German import data & Spanish retail sales in focus
The Pound Euro exchange rate is losing ground after surging in the previous session. The pair settled on Tuesday +0.7% at €1.1037. At 05:15 UTC, GBP/EUR trades -0.15% at €1.1017. The is at the lower end of the daily traded range as the pair looks to target the psychological level of €1.10
According to the British Retail Consortium retailers discounted their goods by less in July than previous months as demand in many sectors picked up after the coronavirus lockdown restrictions were eased. Average shop prices were 1.3% lower in July compared to a year earlier this is an improvement from 1.6% lower in June and 2.4% lower in April.
These figures are broadly inline with official retail sales data last week which showed that overall retail spending jumped back to almost pre-covid levels, although there was a marked difference between sectors, with non-essential goods significantly down compared to a year earlier.
Today there is only mid tier data to capture Pound investors’ attention. Any Brexit headlines will also be closely monitored.
The Euro slipped against the Pound on Tuesday as concerns over a second wave of coronavirus, particularly in Spain kept investors on edge. The UK has already taken Spain off the “safe” list, with holiday makers now required to quarantine for 10 days when they return. Germany has also advised against traveling to parts of Spain which are experiencing rising covid numbers.
Meanwhile Spanish unemployment rose to 15.3% in the second quarter of the year. This is despite the governments’ jobs support programme.
Today Eurozone economic calendar will remain in focus with the release of German import price data and Spanish retail sales. Comments by European Central Bank policy maker Yannis Stournaras that risks to the euro area are tilted to the downside has been broadly brushed off.