GBP/USD: UK Retail Sales
  • Pound (GBP) plunged after BoE kept rates on hold
  • BoE votes 7-2 to hold rates steady
  • Euro (EUR) digests disappointing PMIs
  • EZ retail sales due

The Pound Euro (GBP/EUR) exchange rate is ticking a few pips lower after diving in the previous session. The pair settled -0.85% lower on Thursday at €1.1682 towards the low of the day and the month. At 05:45 UTC, GBP/EUR trades -0.02% at €1.1680. The pair is on track to lose 1.25% this week, its steepest weekly loss in over 6 months.

The Pound tumbled lower in the previous session after the Bank of England made the surprise decision to keep interest rates on hold at 0.1% for at least another month. Heading into the meeting the market had grown increasingly convinced that the BoE would hike interest rates after rhetoric from policy makers turned abruptly more hawkish a few weeks ago.

Policy makers voted 7-2 to keep rates on hold. Andrew Bailey said in the pursuant press conference that the central bank still needed to see hard evidence on the heath of the jobs market before any rate hike. He added that any increase in interest rates wouldn’t directly address the supply chain issues which appear to be causing the high inflation.

Looking ahead there is no high impacting UK economic data. Instead, there are plenty of BoE policy makers out giving speeches, no doubt explaining their votes on Thursday.

The Euro pushed higher versus the pound on Thursday but traded lower versus the US Dollar. Data from the bloc was disappointing. Firstly, German factory orders rebounded less than expected in September. Orders rose 1.3% month on month after crashing -8.8% in the previous month. Analysts had been expecting a 2% rise.

Eurozone business activity also expanded at a slower rate in October. The composite PMI came in at 54.2 down from 56.2 and short of the 54.3 forecast.

Looking ahead the focus will remain on the economic calendar with Eurozone retail sales expected to show 0.3% increase month on month in September, in line with August. A strong reading could boost the Euro.