- Pound (GBP) rose last week after upbeat data
- UK retail sales unexpectedly rose
- Euro (EUR) fell across last week
- German IFO business sentiment data due
The Pound Euro (GBP/EUR) exchange rate is heading higher extending gains from the previous week. The pair gained 0.4% across the previous week, settling on Friday at €1.1819 after trading in a range between €1.1716 – €1.1917. At 05:45 UTC, GBP/EUR trades +0.2% at €1.1844.
The Pound rose last week after strong data. The UK jobs market saw the unemployment rate drop to its lowest level in almost 50 years at 3.7%, and wages including bonuses rose by a record 7%. The strong wage growth helped to fuel inflation which rose to 9% year on year in April, up from 7% in March but just slightly below the 9.1% forecast. Finally, UK retail sales remained resilient unexpectedly rebounding 1.4% month on month in April, after falling 1.2% in March and beating forecasts of -0.2%.
Overall, the data supported a more hawkish Bank of England, fueling bets that the BoE will continue hiking interest rates in the upcoming meetings.
Brexit continues to be in focus as the British government threatens to rip up the Northern Ireland protocol. The EU could retaliate against such a move by starting a trade war.
Today there is no high impacting UK economic data. A speech by BoE Governor Andrew Bailey will be in focus.
The euro traded lower across the previous week amid rising concerns over the health of the eurozone economy. German wholesale inflation rose to a record high of 33.5% year on year in April up from 30.9%. This suggests that consumer prices could continue rising.
Consumer confidence data was, however, more upbeat rising from -22 in April to -21.1 in May despite concerns over the war in Ukraine.
Today attention will switch to the German IFO business sentiment which is expected to deteriorate slightly in May after improving slightly in April as stagflation fears and slowing growth concerns rise
However, the main focus for the Euro will be PMI data which is due on Tuesday.