- Pound (GBP) is rising for a second straight session
- UK grocery inflation jumped in July
- Euro (EUR) is falling despite a trade deal with the US
- EU equities rose to the highest level in 4 months
The Pound-Euro (GBP/EUR) exchange rate is rising for a second straight day. The pair fell 0.78% in the previous session, settling on Monday at €1.1543. It traded between €1.1408 and €1.1543. At 11:30, GBP/EUR trades 0.23% at €1.1552.
The pound is rising after data showed that shop prices in the UK rose by the most in a year in July and food prices accelerated. Overall shop prices in July rose by 0.7% annually, marking the largest increase since April 2024. This was also up from a 0.4% increase in the 12 months to June.
Delving deeper into the figures, food prices increased 4%, up from the 3.7% increase in June and up the most in February 2024.
Separate data from Worldpanel last week showed a 5.2% annual increase, the largest increase since February 2024.
Meanwhile, UK inflation rose to 3.6% year on year in June, up from 3.4% in May. The Bank of England warned that inflation would likely peak at 3.7% in the third quarter of this year.
The Euro is falling despite extending losses from yesterday after the EU-US trade deal was announced over the weekend.
The EU-US trade deal ends months of uncertainty for industries and consumers and means the EU averts the 30% level that President Trump threatened. The baseline agreement sees EU goods imported into the US taxed at 15%, although this is not added to any existing rates. Cars will be subject to 15% rather than the previously applied 27.5%. EU pharmaceuticals and semiconductors will be subject to a 15% tariff.
Part of the selloff could be due to the UK achieving a better trade deal than the European Union. Furthermore, the pound is benefiting from the broader risk-on mood, which has seen European equities rise to a 4-month high.
