- Pound (GBP) rises for a second straight day
- BRC retail sales fall to an 8-month low
- Euro (EUR) falls despite business sentiment improving
- IFO business climate improves to 86.7
The Pound Euro (GBP/EUR) exchange is rising, for a second straight day. The pair rose 0.16% in the previous session, settling on Monday at €1.1991. It traded between €1.1915 and €1.1985. At 17:30 UTC, GBP/EUR is trading 0.26% at €1.1991.
The pound is rising ahead of tomorrow’s Spring Statement from the Chancellor, despite dismal UK consumer confidence. British retailers posted the sharpest drop in sales volumes in eight months in March and expect to see few improvements over the coming months. The Confederation of British Industry’s monthly gauge for retail sales fell in the 12 months to March to -41, down from -23 in February. This marks the weakest level since July last year.
Firms across the retail and wholesale sectors cited global trade tensions as reasons for weaker consumer and business confidence, leading to reduced demand.
In particular, businesses have complained about the £25 billion increase in employers’ Social Security contributions, which was announced in the Autumn Budget and is due to come into force next month.
Tomorrow, Rachel Reeves will announce her spring statement; however, she is expected to cut the UK’s growth forecast for 2025 to 1% from 2% and announce that her £9.9 billion buffer has been wiped out.
The EUR is falling against the stronger pound despite signs of an improving outlook in Germany, the eurozone’s largest economy. German business sentiment rose in March as companies expect a recovery after two years of recession.
The IFO business climate index rose to 86.7 in March, up from 85.3 in February, in line with expectations. The data, based on approximately 9,000 monthly responses from businesses across all sectors of the economy, suggests that businesses are hoping for a recovery.
The German economy is expected to grow by 0.2% in Q1 after falling 0.2% in the final quarter of last year.
