- Pound (GBP) fell on Friday but rose across the week
- CBI retail sales rose in September
- Euro (EUR) rises despite weak data
- German unemployment & EZ economic sentiment figures were in focus
The Pound Euro (GBP/EUR) exchange rate fell on Friday after gains in the previous session. The rose +0.3 on Thursday, settling at €1.2002 and trading in a range between €1.1959 and €1.2012. At the end of the week GBP/EUR closed -0.10% at €1.1978. The pair gained 0.4% across the week.
The pound fell on Friday but continues to hover around its highest level since April 2022 against the euro as investors digested a rebound in retail sales. The Confederation of British Industry retail sales balance jumped from -27 in August to +4 in September, pointing to a cautious recovery in the retail sector.
The data also shows that retailers are moderately optimistic about the outlook, with expectations rising to +5 from -17, marking the highest level since April 2023. However, despite the encouraging numbers, sales are still well below typical seasonal levels amid uneven rebound across the industry.
The data suggests that consumers are starting to feel more confident about the outlook and loosen their purse strings. However, surveys from GFK and the British Retail Consortium reveal that consumers are still cautious owing to the high interest rates and concerns surrounding the New Labour government’s budget next month.
The euro rose despite further signs of the German economy weakening and deteriorating economic sentiment in the broader eurozone.
German unemployment remained at 6% for a fourth straight month in September. However, the number of unemployed people increase by season-adjusted 17,000 after rising by just 2000 in August, pointing to an ongoing gradual weakening in the labour market.
The data comes as German GDP contracted by 0.1% in Q2 and as recession fears are mounting for the eurozone’s largest economy following a string of recent economic indicators that pointed to a worsening of business conditions for key industries.
Meanwhile, eurozone economic sentiment deteriorated in September as the economic recovery struggled. The European Commission’s economic sentiment indicator fell to 96.2 in September. The Commission noted that sentiment had worsened materially in some of the biggest economies, including France and Germany.