- Pound (GBP) fell across the week
- UK construction sector returned to weak growth in March
- Euro (EUR) is rising despite retail sales falling -0.4%
- The ECB rate decision is next week
The Pound Euro (GBP/EUR) exchange rate is falling for six days. The pair fell just 0.1% in the previous session, settling on Thursday at €1.1662 and trading in a range between €1.1651 and €1.1682. At 10:00 UTC, GBP/EUR trades 0.04% at €1.1658.
The pound is moving lower against the euro and is on track to lose 0.35% across the week after modest gains in the previous week.
The UK economic calendar was rather quiet, with just construction activity data showing that the industry expanded last month for the first time since August, all be it slightly.
The S&P global UK construction PMI rose to 50.2 in March, up from 49.7 in February. This pushes it above the 50 level, which separates expansion from contraction, for the first time in seven months.
Friday’s PMI was in line with other business surveys, suggesting that the UK’s economy returned to weak growth in the first quarter of 2024 after a modest recession at the end of last year.
Meanwhile, UK construction companies’ costs rose in March at the slowest pace in three months, and employment fell for a third straight month.
Separately, according to Halifax, UK house prices fell 1% in March for the first time in six months. This report contrasted with more upbeat pictures from other housing data earlier in the week.
While housing data doesn’t affect the pound itself, it can affect consumer confidence, which will impact households’ spending habits.
The euro is rising despite eurozone retail sales falling more than expected in February.
Figures released by Euro Start showed that retail sales fell 0.5% after a flat move in January. The consensus estimates were for a 0.4% decline in February.
The weak sales data highlight the soft consumption picture in the region despite lower inflation. The data suggests that a consumer-led recovery at the start of the year is unlikely.
Meanwhile, German factory orders rose less than expected, up just 0.2% in February after falling over 11% in January.
Looking ahead, attention will be on the ECB next week, which is expected to keep interest rates at 4%. The market will be looking for further confirmation of a June rate cut.
