- Pound (GBP) is falling after modest gains last week
- UK Q1 GDP was 0.7% the strongest in a year
- Euro (EUR) is despite weak German retail sales
- German inflation data is due shortly
The Pound-Euro (GBP/EUR) exchange rate is falling after modest gains last week. The pair rose 0.26% in the previous week, settling on Friday at €1.1703. It traded between €1.1659 and €1.1755. At 14:30, GBP/EUR trades -0.17% at €1.1684.
The pound is falling at the start of the new week; however, losses could be limited following a slew of upbeat data.
Figures from the Office of National Statistics showed that the UK economy grew at its fastest pace in the year in the first three months of 2025. The economy jumped 0.7% confirming the preliminary estimate, as house buyers rushed to beat the deadline of property purchases and manufacturers scaled up output ahead of Trump’s higher import tariffs. However, this growth is not expected to last, with the Bank of England predicting GDP growth of around 0.25% in the second quarter of this year.
Separately, confidence among UK employers rose to a fresh nine-year high this month as companies became more optimistic about the economy’s outlook. The Lloyds Bank business barometer rose to 51% the highest level since November 2015.
Finally, data from the Bank of England showed that British lenders approved 63,000 zero 32 mortgages in May, ahead of expectations, indicating that the housing market recovered quickly from the end of a tax break in April.
The euro is rising, brushing off weaker-than-expected retail sales from Germany. German retail sales unexpectedly fell 1.6% month-on-month in May, pouring cold water on hopes for a strong rebound in the second quarter of the year. Analysts had been expecting a 0.5% increase in sales after a 0.6% drop in April.
Weekly consumption could spell trouble for the eurozone’s largest economy in the second quarter, following unexpectedly strong growth in the first quarter of the year, thanks in part to consumer spending.
Looking ahead, attention will turn to German inflation data, which is due out later today and is expected to tick higher to 2.2% up from 2.1% in May.
