- Pound (GBP) steady after steep falls last week
- Retail sales unexpectedly slumped
- Euro (EUR) looks to PMI data
- Eurozone services & manufacturing expected to grow at a slower pace.
The Pound Euro (GBP/EUR) exchange rate is holding steady at the start of the new week after steep losses in the previous week. The pair shed 0.9% across last week settling on Friday at €1.1644 at the low of the week. At 05:45 UTC, GBP/EUR trades +0.03% at €1.1647.
The Pound came under pressure at the end of last week following a slump in UK retail sales. Sales unexpectedly fell last month as shopper either opted to stay at home to watch the football or were forced to remain at home due to the rise in COVID cases and Pingdom – the notification from the NHS app which told someone to isolate because they had been in contact with someone who tested positive to COVID.
Sales declined by -2.5% from June, the largest drop since January when Britain was in lockdown. Analysts had expected a 0.4% rise in sales.
Concerns are rising over the elevated numbers of COVID as the Autumn approaches.
Attention will now turn to UK PMI data for the service sector and the manufacturing sector. Both sectors are expected to see activity slow. The composite PMI which is considered a good gauge for business activity is expected to slip to 59 down from 59.6. The level 50 separates expansion from contraction.
The Euro traded higher versus the Pound last week but fell versus the US Dollar. Weaker than forecast GDP growth in the second quarter weighed on demand for the common currency. GDP growth was revised lower to 13.6% expansion year on year down from 13.8%.
Today PMI data is in focus for Germany, France and the Eurozone as a whole. In line with the UK PMI’s, the data is expected to show that the rate of expansion is slowing. The composite PMI is expected to come in at 59.7 in August, down from 60.2 in July. A stronger than forecast reading could boost the common currency.