- Pound (GBP) rose after retail sales fell by less than expected
- The EU sues UK over Brexit bill
- Euro (EUR) fell last week after PMI contracted
- German IFO economic sentiment data is due
The Pound Euro (GBP/EUR) exchange rate is slipping at the start of the week. The pair rose just 0.05% across last week settling on Friday at €1.1751, after trading in a range between €1.1642 – €1.1826. At 05:45 UTC, GBP/EUR trades -0.08% at €1.1740.
The pound rose at the end of last week after data showed that UK retail sales fell by less than expected in June. Retail sales fell -0.1% month on month, better than the -0.5% fall in May and ahead of the -0.3% fall forecast by analysts.
The data came after inflation data earlier in the week showed that inflation rose to a fresh 40-year high of 9.2%, up from 9.2%. With prices rising and set to rise higher over the coming months, retail sales are likely to remain weak.
Meanwhile limiting gains in the pound is news that the EU has launched four new legal actions against Britain after the UK parliament passed a bill to scrap some of the post-Brexit Northern Ireland rules. The European Court of Justice could impose fines on the UK.
There is no high impacting UK economic data due today. This week is a relatively quiet week for UK data releases.
The euro rose after the European Central Bank raised interest rates for the first time in over a decade. The central bank raised interest rates by 50 basis points as it tackles record-high inflation.
News that Russia switched on the Nord Stream 1 gas pipeline also helped the euro after fears that Russia would use gas as a political weapon accelerating Germany’s drop into recession.
Meanwhile worse than expected Eurozone PMI, with the composite PMI falling into contraction, raised fears of an economic slowdown.
Today attention turns to the German IFO economic sentiment index which is expected to show that economic morale continued to fall in July to 98.2 down from 85.8.