- GBP to EUR finds strong resistance near €1.2000
- EUR weakens on mixed EU PMI data
- EU retail sales plunge fueling fears of a recession
- BOE interest rate decision eyed
The Pound Euro (GBP/EUR) exchange rate halts a two-day rally after running into strong resistance near the €1.2000 big psychological level. The pair declined -0.15% in the previous session settling on Wednesday at €1.1945, after trading in a range between €1.1987 – €1.1941.
At 05:55 UTC, GBP/EUR trades +0.06% at €1.1952.
In Europe, growth in the service sector as compiled by S&P Global Market Intelligence weakened in Germany and Italy entering in contraction for the first time since early 2021 the survey showed on Wednesday.
At the same time, retail sales in the Eurozone dropped more than the market consensus. The data showed on Wednesday that retail sales plunged in June by -1.3% and respectively -3.7% year-over-year adding to fears that the Eurozone is heading into a recession.
Bank of England
The main risk event that can boost the pair’s volatility includes the Bank of England (BOE) interest rate decision. Based on the market consensus, the central bank is set to hike the benchmark interest rate by 50 basis points later in the day.
This will bring the interest rate up to 1.75% and it will be the first 50 basis points hike since 1997 as the UK is battling the highest level of inflation in nearly four decades.