- Pound (GBP) is inching lower after small gains yesterday
- UK retail sales rise 0.6% MoM in July
- Euro (EUR) is rising ahead of GDP data
- ECB is unlikely to cut rates next week
The Pound-Euro (GBP/EUR) exchange rate is edging lower after small gains yesterday. The pair rose 0.05% in the previous session, settling on Thursday at €1.1533. It traded between €1.1517 and €1.1553. At 08:30 UTC, GBP/EUR trades -0.05% at €1.1528. The pair is set to fall across the week.
The pound Is ticking lower after mixed UK retail sales data. According to figures from the Office for National Statistics, British retail sales rose more than expected, up 0.6% month on month in July, following a 0.3% rise in June. This was ahead of the 0.2% increase that economists had expected, thanks to the warm weather and the Women’s Football Euro Cup.
However, the UK statistics agency also revised down its retail sales figures for the first half of the year due to errors in compiling the data. A notable downward revision occurred in June, initially recorded at 0.9% growth, but now revised downward to 0.3%. The new figures point to consumers being reluctant to spend, which is not that surprising given the sticky inflation. UK inflation is 3.8% and the BoE sees it rising to 4%.
Meanwhile, data that the Bank of England policy makers watched closely showed that businesses have cut jobs at the fastest pace in almost four years. Employment levels across the 2000 companies in the survey were 0.5% lower in August compared to the same month a year earlier.
The euro is edging higher as investors await Eurozone GDP figures. Economists expect the eurozone economy to grow 0.1% quarter on quarter in the second quarter of this year, in line with the preliminary reading.
Easy be president, Christine Lagarde warned last month, over the prospect of slowing growth in the region as the pull-forward effect of Trump’s trade tariffs fades.
Even so with inflation remaining around the central bank’s 2% target policy, makers are keen to leave rates on hold for the time being, given that the bar for another rate cut is high.