- Pound (GBP) falls after 3-days of gains
- Christmas sales raise concerns of a recession in Q4
- Euro (EUR) rises despite German industrial production falling
- Eurozone unemployment data is due
The Pound Euro (GBP/EUR) exchange rate is falling after three days of gains. The pair rose 0.13% in the previous session, settling on Monday at €1.1637 and trading in a range between €1.1597 – €1.1626. At 08:00 UTC, GBP/EUR trades -0.04% at €1.1633.
The pound is drifting lower after figures show that UK retailers experienced lackluster sales around Christmas.
The British Retail Consortium said spending in cash terms in December was 1.7% higher than a year earlier; however, when inflation is taken into account, this represents a decline, adding to concerns that the economy has tipped into a mild recession.
Households have continued to struggle as the Bank of England raised interest rates to a 15-year high of 5.25%.
With consumer price inflation at 3.9% in November, this is still well above the Bank of England’s 2% target.
The euro is rising despite German industrial production data disappointing and raising the likelihood that the eurozone’s largest economy will enter a recession in the final quarter of 2024.
German industrial production continued a downward trend in November falling 0.7% month on month after falling 0.3% month on month in October. On a yearly basis, industrial output was down almost 5%, with a sharp drop in construction activity particularly concerning.
The data comes after mixed data from Germany in previous sessions. Last week, retail sales slumped 2.5% month on month, highlighting the struggles that households face as inflation ticked higher.
However, exports have been a bright spot in the economy, rising by a larger-than-expected 3.9%. However, that’s unlikely to be sufficient to ward the economy away from a technical recession in the final quarter of the year.
Looking ahead, eurozone unemployment data is due and is expected to show that the unemployment rate remained steady at 6.5% in November.