- Pound (GBP) falls for a seventh day
- BRC retail sales slow to 1.1%
- Euro (EUR) rises further as sentiment improves
- Hopes rise that the German Green’s could still support fiscal reform
The pound-euro (GBP/EUR) exchange is falling, extending losses for a seventh straight day. The pair fell 0.36% in the previous session, settling on Monday at €1.1881. It traded in a range between €1.1877 and €1.1940. At 12:30 UTC, GBP/EUR is trading -0.09% at €1.1870.
The euro has risen to a multi-month high against the pound and the US dollar after the German Green party threatened to block Friedrich Merz’ debt brake reform.
The Greens’ refusal to back Chancellor Friedrich Merz’s sweeping reforms to increase state borrowing for defence and infrastructure spending could derail the plans. These plans have excited markets, boosting stocks to a record high last week and lifting the euro to multi-month highs versus its major peers.
The Greens have said that they would back measures that include genuine support for climate policies and the economy, suggesting that their refusal may be part of an opening gambit for negotiations.
The eurozone economic calendar is quiet today. Yesterday’s figures showed that Eurozone Sentix investor confidence brightened significantly, partly due to the expected fiscal reforms in Germany.
The pound is drifting lower versus the euro but was gaining against the weaker U.S. dollar amid a quiet UK economic calendar and as UK retail sales slow. British Retail Consortium retail sales lost momentum in February after a bounce at the start of the year. Sales experienced a modest increase in February of 1.1%, year on year. This was below the 2.6% increase seen in January.
The food sector was the driving force, posting a 2.3% year-on-year increase in sales. However, demand for spring fashion was weak as the weather remained wintery. The retail sector is bracing itself for higher staffing costs from next month, which could leave firms with little choice but to raise prices.
Attention is on Friday’s GDP figures, which could provide more clues over the economy’s health.
