- Pound (GBP) is falling after gains last week.
- CBI retail sales dropped to the lowest level since records began
- Euro (EUR) is rising despite weak German consumer confidence
- German consumer sentiment tumbled to a 3-year low
The Pound-Euro (GBP/EUR) exchange rate is falling after gains last week. The pair rose 0.48% in the previous week, settling on Friday at €1.1545. The pair traded between €1.1467 and €1.1557. At 15:00 UTC on Monday GBP/EUR trades -0.07% at €1.1537.
The pound is falling on Monday as investors weigh the latest UK retail sales data ahead of the Bank of England interest rate decision later this week.
According to the Confederation of British Industry, the monthly retail sales balance dropped to -68 in April from -52 in March, marking the lowest reading since records began in 1983. Around 77% of firms reported that sales were down year-on-year, while only 9% reported an increase.
Retailers noted that weak consumer confidence weighed on spending in April, as households remained cautious amid inflation concerns.
Separately, a Bank of England survey showed that UK firms have raised their price expectations. The Bank’s Decision Maker Panel indicated that companies expect prices to rise by 4.4% over the next 12 months, up from 3.7% in March.
The data comes ahead of Thursday’s BoE decision, where policymakers are widely expected to leave interest rates unchanged as they assess the economic impact of the Iran conflict before making further moves.
The euro is rising despite a sharp drop in German consumer confidence, reflecting the impact of the Middle East conflict.
Consumer sentiment fell to -33.3 for May, down from -28.1 in April—a 5.2-point decline and the steepest fall since October 2022, when the German economy was hit by the energy shock following the Russian invasion of Ukraine.
Confidence has deteriorated as higher global energy prices weigh on the outlook for growth. Inflation in Germany has also picked up, rising to 2.7% from 1.9% in March.
The data comes ahead of inflation figures later this week and the European Central Bank rate decision, where policymakers are expected to leave rates unchanged but could hint at a possible hike in June.