GBP/USD: Both US & UK Retail Sales Impress
  • Pound (GBP) edges lower after 4 days of gains
  • UK services PMI unexpectedly revised higher
  • Euro (EUR) fell despite PMI upgrade, PPI growth slowed
  • Eurozone retail sales are due to rebound

The Pound Euro (GBP/EUR) exchange rate is moving a few pips lower snapping a four day winning run. The pair settled 0.34% higher on Tuesday at €1.1749 just off the high of €1.1762 reached earlier in the session. At 05:45 UTC, GBP/EUR trades -0.03% at €1.1746.

The Pound pushed higher in the previous session boosted by data which showed that the UK service sector unexpectedly grew at a faster rate in September. The service sector PMI came in at 55.4 in September’s final print, up from August’s 6 month low of 55 and well ahead of the 54.6 forecast.

The data also revealed that inflationary pressure intensified as businesses continued to pass on higher costs to their customers. Owing to the raid increases in fuel and energy costs the rate of prices charged inflation accelerated sharply – at the fastest pace since the survey began back in 1996.

The prospect of higher, more persistent inflation to come could leave the Bank of England little option but to raise interest rates sooner than forecast. As a result, the Pound pushed higher.

Today the UK economic calendar is quiet, leaving supply chain issues, Brexit and the ongoing fuel situation in the driving seat.

The Euro came under pressure in the previous session despite upward revisions for composite PMIs for Germany, the largest economy in the Eurozone and in the bloc itself. The Eurozone composite PMI, which is often considered a good gauge for business activity printed at 56.2 in September, up from 56.1 in the initial estimate but down from 59 recorded in August.

Separately, PPI, which measures inflation at wholesale level eased in August, rising 1.1% month on month, down from 2.5% in July and short of the 1.3% forecast.

Today the focus remains very much on the economic calendar with German factory orders and Eurozone retail sales in focus. Sales are expected to rebound 0.8% month on month after declining -2.3% month on month in July.