- Pound (GBP) rises after strong retail sales
- BRC LFL sales jumped 8.1%
- Euro (EUR) eases further after Lagarde’s backtrack
- German trade balance & Italian industrial production due
The Pound Euro (GBP/EUR) exchange rate is heading higher for a third straight day. The pound rose 0.3% on Tuesday, settling at €1.1862 after rising as high as €1.1887 earlier in the session. At 05:45 UTC, GBP/EUR trades +0.05% at €1.1868.
The pound continued its recovery on Tuesday boosted by some upbeat data. According to the British Retail Consortium, retail sales jumped in January as consumers hit the shops. Total sales rose by 11.9% last month, a significant increase from the 1.3% decline reported in January 2021, when Britain was locked down.
On a like for like basis retail sales rose 8.1% year on year. It worth noting that sales were so strong, in January which is traditionally a slow month and even when inflation was at a 30 year high. However, these price rises could depress sales going forwards as households find it necessary to tighten their purse strings.
Still with people going back to the office, retailers in city centres could see a pickup as long as consumer confidence remains upbeat.
Today there is no high impacting UK data so the euro could be the driving force behind the pair.
The euro continued falling yesterday, as European Central Bank President Christine Lagarde’s word continued to weigh on demand for the common currency. After a hawkish turn last week, Lagarde back tracked this week with a significantly less hawkish speech, suggesting that the ECB would not be tightening policy in a big way as inflation would fall back to the target level of 2%.
Looking ahead there is no high impacting eurozone economic data die to be released. Attention will be on second tier data such as the German trade balance and Italian industrial production. The German trade balance is expected to fall to €10.4 billion in December, down from €10.9 billion in November.