gbp-british-pound-coins - GBP
  • Pound (GBP) rises as retail sales fall by less than forecast
  • UK PMIs fell by less than expected
  • Euro (EUR) falls as PMI data falls to a 17 month low
  • ECB raised rates by 50 basis points

The Pound Euro (GBP/EUR) exchange rate is rising after losses in the previous session. The pair fell -0.3% settling on Thursday at €1.1769, after trading in a range between €1.1642 – €1.1773. At 10:45 UTC, GBP/EUR trades +0.41% at €1.1767.

The pound is pushing higher after UK business activity data hit a 17-month low, but still came in better than expected. The S&P Global Composite purchasing managers index (PMI) fell to 52.8 in July from 53.7 in June. This was above 52.5 which analysts forecast.

Breaking the data down the data further the service sector PMI was 53.3 in July down from 54.3. Meanwhile, the manufacturing PMI was at 52.2 down from 52.8. The level 50 separates expansion from contraction.

UK retail sales also fell by less than forecast in June. Sales fell by -0.1% month on month, an improvement from -0.5% in May. This was ahead of the -0.3% decline forecast.

Delving deeper into the figures, food sakes were strong, overshadowing weaker spending on fuel as prices at the pumps kept climbing.

With inflation at 40 year high and expected to rise to 11% the coat of living crisis is set to continue and will likely mean that retail sales remain weak,

The euro is falling after business activity contracts for the first time since February 2021. The composite PMI which is considered to be a good gauge for business activity dropped by more than expected to 49.4 in July a 17-month low and the first reading below 50 since February last year.

Business activity has slowed as prices surge across the region.

The data comes after the ECB hiked interest rates yesterday for the first time in 11 years. The central bank raised rates by 50 basis points, more than the 25 basis points expected. The central bank also announced the anti-fragmentation tool.