Pound euro (GBP/EUR) exchange rate falters following UK retail release
The pound euro (GBP/EUR) exchange rate is trending lower this morning following a larger-than-expected decline in UK retail sales.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1859, down approximately 0.2% from this morning’s opening rate.
Pound (GBP) slips as UK retail activity falls
The Pound (GBP) is stumbling this morning after a worse-than-forecast set of UK retail data.
Retail sales in the UK declined by 1.2% on a monthly basis in June, falling sharply from a 2.9% rebound in May and widely missing market projections of a more modest 0.4% decline.
Analysts attributed the slumping consumer activity to last month’s election uncertainty, wet weather and low footfall.
Grant Fitzner, Chief Economist at the ONS, also noted that decreased spending in department, clothing and furniture stores were the biggest contributors to the decline.
‘Retail sales fell back from May’s recent high point with falls across all main shop types, with the exception of petrol stations.
Retailer commentary suggested that both poor weather and economic conditions had an effect, as consumers showed caution with their spending.’
Euro (EUR) wavers amid data lull
The euro (EUR) is largely rangebound this morning with fresh economic data in short supply in the Eurozone.
Amid a lack of macroeconomic releases, the European Central Bank’s (ECB) latest interest rate decision continues to stymie the common currency, after the central bank decided to keep interest rates unchanged yesterday afternoon.
In a statement, the ECB’s Governing Council said:
‘Monetary policy is keeping financing conditions restrictive. At the same time, domestic price pressures are still high, services inflation is elevated and headline inflation is likely to remain above the target well into next year.’
Later on, ECB President Christine Lagarde reiterated the central bank’s data-driven approach towards monetary policy, stating that the outcome of September’s monetary meeting remains ‘wide open’, contingent on upcoming inflationary and labour releases from across the Eurozone
Pound euro exchange rate forecast: risk appetite to drive movement?
Looking ahead, a data-light end to the week could see global risk dynamics drive movement in the pound euro exchange rate. The increasingly risk-sensitive pound could benefit from an upbeat market sentiment, whilst gloomy trading conditions may see the safe-haven euro take precedent.
Elsewhere, shifting interest rate cut bets could weigh on GBP/EUR movement. Should markets begin to price in a more dovish approach from either central bank, the currency pairing may encounter volatility.