GBP/EUR: Brexit Extension & EU Trade Tariffs In Focus
  • Pound (GBP) looks to retail sales & PMI data for clues
  • UK PMI to show slight deceleration in growth
  • Euro (EUR) slips on weaker consumer confidence data
  • Eurozone PMIs in focus

The Pound Euro (GBP/EUR) exchange rate edging higher after a flat finish in the previous session. The pair settled flat on Thursday at €1.1863 after refreshing a 20-month high of €1.1874 earlier in the session. At 05:45 UTC, GBP/EUR trades +0.04% at €1.1868. The pair is set to gain 0.16% across the week.

The Pound drifted lower in the previous session, with a lack of fresh catalyst to drive movement. Investors continued digesting CPI data from earlier in the week. Inflation eased lower in September but is unlikely to remain low. The BoE see inflation rising to 4% by the end of the year and are sounding increasingly more likely to raise interest rates sooner rather than later.

Today there is plenty of data for investors digest. Firstly, UK retail sales are due to be released. Retail sales excluding fuel are expected to rise 0.2% MoM after falling 1.2% in August. On an annual basis retail sales excluding fuel are expected to decline -1.7%.

In addition to retail sales investors will be looking towards the release of PMI data for both manufacturing and services. Both readings are expected to reveal a slight deceleration in growth, although still firmly in expansionary territory.

The Euro came under some pressure in the previous session as Eurozone consumer confidence declined in October amid rising inflation and a slowdown of the economic recovery. The measure of consumer confidence declined to -4.8 from -4 in September. However, consumer confidence remains above its pre-pandemic level.

Looking ahead Eurozone PMI data will also be in focus. Analysts are expecting the composite PMI, a good gauge of business activity to tick lower to 55.2 from 56.2. The level 50 separates expansion from contraction. The German manufacturing reading is likely to be watched closely after German industrial production and factory orders numbers have come under pressure amid ongoing supply chain issues.