- Pound (GBP) is steady after steep losses last week
- The pound fell sharply last week on tax hike worries
- Euro (EUR) is unchanged after gains last week
- EU – US trade talks continue ahead the this week’s deadline
The Pound-Euro (GBP/EUR) exchange rate is unchanged after steep losses last week. The pair fell 0.96% in the previous week, settling on Friday at €1.1591. It traded between €1.1532 and €1.1715. At 11:30, GBP/EUR trades +0.03% at €1.1595.
The pound fell sharply last week hurt by the prospect of U.S. tax rises in order to plug a black hole in UK public finances yeah UK chancellor Rachel Reeves refused to rule out tax hikes in the autumn budget on the labour government was forced to make a major U-turn on its welfare reforms to avoid a rebellion within the party. The costs of watering down the reforms have created a black hole in public finances, which the government will likely need to plug in the autumn budget.
Figures today showed that UK house prices stagnated on a monthly basis in June, according to the Halifax. The data shows the subdued state of the UK housing market following an increase in tax on property transactions, which began in April.
The UK economic calendar is relatively quiet until the GDP figures on Friday.
The euro is broadly unchanged after strong gains last week. Attention is on EU-U.S. trade talks as leaders raced to secure a deal ahead of the deadline this week.
The two major economies have not yet reached a deal, and there are only a few days left before the 90-day reprieve on reciprocal tariffs imposed by the US expires.
The two sides are aiming for an agreement in principle with the details likely to come after further summer negotiations.
On the data front, eurozone retail sales fell by the most since August 2023. Eurozone retail sales declined 0.7% month-over-month in May this year, marking the steepest decline in almost two years and following an upwardly revised 0.3% rise in April. The decline in sales came as US trade tariff concerns eroded confidence.
