- Pound (GBP) falls after gains yesterday
- UK retail sales rise 0.4% MoM vs -0.4% expected
- Euro (EUR) drifts higher vs GBP but falls vs USD
- ECB Lagarde said there is no set path for rates
The Pound-Euro (GBP/EUR) exchange rate is falling on Friday, snapping a three-day winning run. The pair rose 0.1% in the previous session, settling on Thursday at €1.1719. It traded between €1.1672 and €1.1722. At 16:00 UTC, GBP/EUR is trading -0.11% lower at €1.1707. The pair is set to rise 0.33% this week, marking a second straight weekly rise.
The pound is falling despite better-than-expected UK retail sales data, as British retailers posted the best start to the year since 2021.
According to data from the Office of National Statistics, retail sales rose 0.4% month over month in March after a downwardly revised 0.7% increase in February. This was ahead of expectations of a 0.4% decline.
This equates to retail sales rising by 1.6% in the first quarter of the year, marking the strongest reading in four years and providing a 0.08% boost to economic output.
However, optimism could be short-lived, as UK consumer confidence fell in April to its lowest level since 2023. Households are facing rising energy bills and volatile global financial markets, which could hurt consumption going forward.
The euro is drifting higher against the pound in a quiet day for economic data in the region, but fell against the USD as trade tensions eased slightly. The EUR has benefited from the selloff of the USD in April.
European Central Bank president Christine Lagarde said that the disinflation process in the region is well on track. However, she added that the central bank is not pre-committing to a particular path amid the ongoing escalation of trade tensions.
Attention will turn to next week’s inflation data, which is expected to show inflation at two 2% below the ECB’s target level. Weaker-than-expected inflation could raise some concerns about consumption as the growth outlook deteriorates.
