- Pound (GBP) rises after 2-days of losses
- UK retail sales struggle
- Euro (EUR) falls after weak data
- German factory orders drop
The Pound Euro (GBP/EUR) exchange rate is rising on Tuesday after two days of gains. The pair rose +0.15% in the previous session, settling on Monday at €1.1606 and trading in a range between €1.1578 – €1.1633. At 05:35 UTC, GBP/EUR trades 0.09% at €1.1616.
The euro today as investors digested a series of weaker-than-expected data raising concerns over the economic outlook for the region. German factory orders unexpectedly fell in April by 0.4% compared to the previous month, after a 10.9% contraction in the previous month analysts had been expecting factory orders to rise by 3%.
The data paints a gloomy picture for Europe’s largest economy, which tipped into recession in the first quarter of the year. The data suggests that the recession could drag into the second quarter.
Eurozone retail sales were also weaker than expected at 0% month on month in April after dropping 0.4% in March. Economists had been predicting that retail sales would increase by 0.2%. The data highlights the pressure that the consumer is under as the ECB continues to hike interest rates and as inflation remains high.
While inflation has started to cool, which could help retail sales in the coming months, the rebound is likely to be limited until real wages start to rise later in the year.
The pound pushed higher on Tuesday despite data from the British Retail Consortium showing that the bank holidays hadn’t boosted retail sales across May. Total sales dropped by 3% during the last month, with just four categories posting sales figures.
BRC CEO Helen Dickinson said that “The trio of bank holidays has failed to get shoppers spending”. Sales growth slowed to its lowest level in six months.
The data comes as discretionary spending continues to fall amid the high cost of living, which continues to squeeze household incomes.
