- Pound (GBP) falls and falls across the week
- Retail sales fell stalled in March at 0%
- Euro (EUR) rises after losses yesterday
- German wholesale inflation cools less than expected
The Pound Euro (GBP/EUR) exchange rate is falling after gains yesterday The pair rose +0.15% in the previous session, settling on Thursday at €1.1682 and trading in a range between €1.1662 and €1.1698. At 15:00 UTC, GBP/EUR trades -0.03% at €1.1679.
The pound fell after UK retail sales came in weaker than expected as households continued to feel squeezed.
Retail sales stalled in March at 0% month on month after a revised 0.1% gain in February. Economists had expected a 0.3% increase.
The data adds to evidence of a lackluster recovery after a recession in the final quarter of last year. Consumers are clearly still under pressure amid the ongoing cost-of-living crisis, as interest rates remain at a 15-year high.
Inflation has cooled considerably from its peak of over 10% to current levels of 3.2%. However, households will want to see interest rates cut in order to ease up some pressure on spending.
The Bank of England is expected to cut interest rates twice this year, with the first-rate cut being priced for August. This has been pushed back from expectations of a June rate cut.
The euro is trading modestly higher after stronger-than-expected German wholesale inflation. The producer price index measures wholesale inflation, rose by less than expected in March, dropping 2.8% less than the 3.2% forecast.
The data comes after eurozone inflation earlier in the week confirmed that consumer prices had fallen to 2.4% in March, down from 2.6%
Inflation in the region appears to be trending towards the ECB’s 2% target, which could put them on track for a rate cut in June.
ECB President Christine Lagarde spoke earlier in the week and said that if inflation continued to cool, then a rate cut could be on the cards. She also highlighted signs of an economic recovery in the region.
Looking ahead, no more economic data are due to be released today. Attention will turn to next week, when business activity data for both the eurozone and the UK will be released on Tuesday.
