• Pound (GBP) falls as PM arrives in Northern Ireland
  • US retail sales are due
  • Euro (EUR) is supported by hawkish ECB comments
  • German PPI data is due

The Pound Euro (GBP/EUR) exchange rate is falling for a third straight session. The pair fell 0.1% in the previous session, settling on Thursday at €1.1238 after trading in a range between €1.1218 – €1.1276. At 05:45 UTC, GBP/EUR trades -0.03% at €1.1232. The pair is set to fall 0.45% across the week.

The pound drifted lower in the previous session in quiet trades as investors continued digesting cooler-than-expected inflation data from earlier in the week. The fall in inflation take the pressure off the BoE to raise interest rates aggressively going forwards.

Today Brexit is back on the agenda amid news that Prime Minister Rishi Sunak has arrived in Northern Ireland for post-Brexit talks. The PM is there to assess whether political parties I know that island or bank his plans to improve the post-Brexit trading arrangements.

Officials from both the UK and the EU have been taking part in intense talks on the Northern Ireland protocol, with expectations rising that new terms to the deal could be announced as soon as next week.

in addition to Brexit, attention will also be on UK retail sales, which are expected to fall again in January by -0.3% after declining 1% month on month in December. Weak retail sales for another month would suggest that consumers are reining in spending amid the cost of living crisis, which could point to inflation cooling further in the coming months.

The euro pushed higher in the previous session as investors digested comments from several European central bank policymakers including chief economist Philip Lane. Mr Lane said that much of the impact of recent rate hikes on inflation is yet to be felt, acknowledging the lag time between rate hikes and the impact on the real economy.

Attention today will turn to German wholesale inflation which is expected to show that PPI cooled further the January to 16.4% year on year, down from 21.6% in December. On a monthly basis PPI is expected to fall -1.6%, own from -0.4%. Cooling inflation could pull the euro lower.