- Pound (GBP) falls on COVID nerves
- UK retail sales in focus
- Euro (EUR) rose versus GBP but fell versus USD
- German PPI inflation due
The Pound Euro (GBP/EUR) exchange rate is extending losses for a second straight session. The pair settled -0.55% lower on Thursday at €1.1678. At 05:45 UTC, GBP/EUR trades -0.16% at €1.1658. The pair is on track to lose 0.8% across the week, its second straight week of losses.
The Pound came under pressure in the previous session amid risk off trade. Concerns over rising COVID cases globally sent investors in search of safe haven currencies.
Overnight GFK consumer confidence declined to -8 August down from -7 in July which had been the highest level that consumer morale had reached since the pandemic.
Adding pressure to the Pound was a study by Oxford University and the Office of National Statistics which revealed that both the AstraZeneca and the Pfizer jabs are less effective versus the delta variant.
Attention will now turn to UK retail sales and public sector net borrowing. Expectations are for retail sales (ex-fuel) to remain steady at 0.3% in July compared to the month earlier. On an annual basis retail sales are expected to rise 5.7%, up from 7.4% in June. Given the recent strength in the labour market and relatively upbeat sentiment retail sales could be upbeat. However, its worth keeping in mind and covid cases rose sharply in July with many order to self-isolate in Pingdom, which could drag on sales.
The Euro traded higher versus the Pound on Thursday but was lower versus the US Dollar in risk off trade. European stocks fell sharply lower as investors moved out of riskier assets into perceived safe havens such as the US Dollar.
Today investors will look towards the release of German PPI data. Weaker than expected wholesale inflation numbers could drag on the Euro. Analysts are forecasting inflation will rise 0.8% month on month in July, down from 1.3%