- Pound (GBP) holds steady for a second day
- BRC retail sales were weak in Q4
- Euro (EUR) is supported by trade tariff doubts
- Eurozone inflation rises to 2.4% YoY
The Pound Euro (GBP/EUR) exchange rate is holding steady for a second day on Tuesday. The pair fell -0.01% in the previous session, settling on Monday at €1.2047. It traded in a range between €1.2020 and €1.2071. At 10:00 UTC, GBP/EUR trades +0.02% at €1.2049.
The pound is unchanged against the euro as investors digest mixed retail sales data from the British Retail Consortium (BRC).
The group revealed that Black Friday spending helped total retail spending rise 3.2% year on year in the four weeks to December 28, rebounding after a 3.3% decline in the previous month. This marked the largest increase since March, helped by Black Friday, which fell in the BRC’s December. In 2024 but in November in 2023, distorting year-on-year comparisons.
However, in the fourth quarter, spending increased just 0.4% in annual terms, which is a fall in sales volumes once higher prices are taken into account.
The data comes as Britain’s economy lost momentum in the final part of 2024 after tax rises were announced in the Labour government’s budget.
The euro is unchanged as investors digest the latest inflation data and amid questions over Trump’s potential trade tariffs.
Eurozone inflation accelerated to 2.4% year over year in December, up from 2.2% in November. Meanwhile, core inflation, which excludes more volatile items such as food and fuel, increased unexpectedly to 2.8%, up from 2.7% in November. Hotter-than-expected core inflation means a 50 basis point rate cut from the ECB anytime soon is looking unlikely.
The ECB is expected to cut interest rates by 25 basis points four times across 2025.
Questions over how aggressive Trump will be when applying trade tariffs are also supporting the euro. A report in the Washington Post yesterday suggested that the Trump administration may seek more specific targeted tariffs than initially expected, helping ease fears of wider levies.
