EUR/GBP advances to near 0.8590, UK Retails Sales reports no growth in February

EUR/GBP trims its intraday losses and rises to near 0.8590 during the early European session on Friday. The cross moves in the positive territory despite positive Retail Sales data from the United Kingdom (UK).

UK Retail Sales (Month-on-Month) for February showed no growth, printing a reading of 0.0%, compared to the expected decline of 0.3% and the 3.4% growth recorded in January. However, Core Retail Sales, which exclude auto and motor fuel sales, increased by 0.2% month-on-month, surpassing expectations of a 0.1% decline and maintaining the 3.2% growth seen in January.

BOE Governor Andrew Bailey has reiterated that rate cuts this year are within reason, stressing that all meetings are subject to consideration, with decisions made anew each time. He emphasized the importance of having confidence in the direction of wage growth and stated that waiting for inflation to drop to 2% before contemplating rate cuts is unnecessary. Bailey also expressed optimism about recent economic developments, viewing them as positive news.

On the other hand, the Euro faced downward pressure on the latest Purchasing Managers Index (PMI) survey by HCOB on Thursday revealing that the Eurozone Manufacturing PMI for March was 45.7, lower than the previous reading of 46.5, and below the consensus forecast of 47.0. However, the Services PMI improved to 51.1 in March from 50.2 in February, surpassing the estimated 50.5. The Eurozone PMI Composite rose to 49.9 in March, compared to the expected 49.7 and the previous reading of 46.3.

On Friday, the German Import Price Index (Month-on-Month) for January was reported as flat at 0.0%, contrary to the expected decline of 0.3% and the previous decline of 1.0%. The year-over-year figure indicated a decline of 5.9%, which was better than the expected decline of 7.4% and the previous decline of 7.0%.

(This story was corrected on March 22 at 09:10 GMT to say, in the first paragraph, that the cross moves in the positive territory, not negative territory.)