- Pound (GBP) rises as outlook improves
- UK retail sales rise 0.5% MoM
- Euro (EUR) looks to Spanish inflation data
- EZ consumer sentiment set to improve
The Pound Euro (GBP/EUR) exchange rate is rising for a fourth straight session. The pair rose +0.16% in the previous session, settling on Monday at €1.1533 and trading in a range between €1.1498 – €1.1542. At 05:35 UTC, GBP/EUR trades +0.07% at €1.1540.
The pound pushed higher on Monday despite the UK bank holiday long weekend, which meant the equity markets were closed. Still, the pound was supported by an upbeat mood following a U.S. debt ceiling deal and strong UK data at the end of last week.
UK retail sales were stronger than forecast rising 0.5% month on month in April, up from -1.2% decline in March when retail sales were adversely affected by bad weather. The April print was 0.3% higher than what economists had forecast, showing resilience despite high inflation and rising food prices.
The upbeat retail sales data supports the improving outlook for consumer spending as the job market remains resilient and consumer sentiment starts to recover. Retail sales data is notoriously volatile, and retailers are by no means out of the woods. Retailers will be hoping that the 3 bank holidays this month could boost sales further.
There is no high-impacting UK economic data due to be released today; instead sentiment is likely to drive movement in the pound.
The euro is edging lower as investors look ahead to a busy day on the economic calendar with the release of Spanish inflation as well as eurozone consumer confidence.
Spanish inflation it’s expected to have cooled further in may ticking down to 3.4% from 3.8% year on year in April. Cooler inflation would support a less aggressive ECB. However it’s worth noting that inflation within the eurozone still very varied, with some countries in eastern Europe still experiencing double digit inflation.
Eurozone economic sentiment and consumer confidence data is also due. Economic sentiment is set to deteriorate to 98.9 in May, from 99.3 in April. Consumer confidence is set to improve to -17.4 in May.