- Pound (GBP) is falling after rising yesterday
- BoE is expected to cut rates by 25 bps
- Euro (EUR) rises despite eurozone retail sales falling
- Sales fall despite real wages rising
The Pound-Euro (GBP/EUR) exchange rate fell on Wednesday after rising yesterday. The pair ended unchanged in the previous session, settling on Monday at €1.1774. It traded between €1.1734 and €1.1820. At 21:30 GBP/EUR trades -0.19% at €1.1752.
The pound is falling, giving back yesterday’s gains, as the market continues to weigh up a UK trade agreement with India and as UK representatives are also in talks with U.S. officials over Trump’s 100% tariff on all movies produced outside of the US. Trump hasn’t given any details about the proposal, but Britain has a leading film and TV production industry that could be threatened.
Attention is also turning to tomorrow’s Bank of England interest rate decision. The central bank is expected to cut interest rates by 25 basis points to 4.25% as fears grow over the impact of Trump’s trade tariffs. Some economists have also argued that a bigger 50 basis point cut is needed to help businesses and households amid the dramatically deteriorating global outlook.
The euro is rising despite retail sales falling in March. The data show we are generally councils to counterpoint once a month over month in March following a downwardly revised 0.2% in February last falling short of expectations.
Declining sales come as consumers hold back on spending amid economic uncertainties and trade tensions, and despite wages growing faster than inflation, whilst inflation hovers just above 2%, wage growth has consistently surpassed 4%, enhancing purchasing power, but this has not yet prompted an increase in spending.
Slower spending hampers economic growth and could delay an economic recovery.
Looking ahead the eurozone economic calendar is quiet tomorrow. German trade figures as well as industrial production will be under the spotlight. German pastoral production is expected to rise 0.8% in February after falling 1.3% in the previous month.