- Pound (GBP) falls after falling last week
- The market mood slumps on recession fears
- Euro (EUR) rises but falls against USD
- Eurozone retail sales rise 2.3% YoY
The Pound-Euro (GBP/EUR) exchange rate is falling, extending losses from last week. The pair fell 1.5% in the previous week, settling on Friday at €1.1764. It traded between €1.1730 and €1.2018. At 12:00 UTC, GBP/EUR is trading -0.53% at €1.1702.
The pound is weakening against the euro and the US dollar as the market mood sours further, causing chaos in the financial markets and prompting investors to exit riskier assets and currencies.
While the UK has only been hit with a 10%, however, this comes at a time when the UK economy is already struggling amid stagnant growth and sticky inflation. The economy is also vulnerable to the effects of slowing global growth.
Major stock markets plunged on Monday after President Trump showed no signs of backing down from his trade tariff plans. As a result, investors are increasingly pricing in the prospect of a recession. The FTSE 100 has fallen 4%, reaching its lowest point in almost 14 months.
The UK economic calendar is relatively quiet this week, with GDP data scheduled for release on Friday. Instead, the pound will be driven by sentiment.
The euro is rising against the pound but is falling lower against the US dollar as investors continue to weigh up the impact of Trump’s trade tariffs. The euro rose strongly last week against the pound and the US dollar, despite the imposition of 20% tariffs on European imports into the US. Instead, the euro benefited from investors selling out of the US dollar and not really knowing where to put their funds.
On the data front, eurozone retail sales came in stronger than expected, rising 2.3% year-over-year in February, well ahead of the 1.8% forecast. On a monthly basis retail sales rose 0.9% up from 0.2% pricing for the first time in five months.
As the economic calendar remains quiet for the rest of this week, attention will focus on the European Union’s decision on whether to retaliate against Trump’s trade tariffs.