- EUR/GBP retraces its recent losses, possibly driven by the weaker UK Retail Sales.
- UK Retail Sales (YoY) declined by 4.4%in April, against the expected growth of 1.6%.
- Eurozone Retail Sales rose by 0.7% YoY in March, swinging from the previous decline of 0.5%.
EUR/GBP hovers around 0.8580 during the European session on Tuesday, retracing its recent losses registered in the previous session. The Pound Sterling (GBP) lost ground, possibly driven by the disappointing Retail Sales report from the United Kingdom (UK).
In April, the BRC Like-For-Like Retail Sales experienced a year-over-year decline of 4.4%, contradicting expectations for a 1.6% growth. This latest figure represents a significant reversal from the 3.2% increase observed in March and marks the poorest reading since November 2019.
Helen Dickinson, Chief Executive Officer of the British Retail Consortium (BRC), attributed the disappointing sales to dismal weather and remarked that retailers had a challenging start to spring, even considering the change in Easter timing.
The Bank of England (BoE) is anticipated to keep interest rates unchanged at 5.25% on Thursday's meeting. Investor sentiment regarding policy rate cuts by the BoE has been delayed to September due to robust wage growth in the United Kingdom (UK), which is fueling core inflation, the central bank's preferred inflation measure.
In the Eurozone, the Retail Sales (YoY), released by Eurostat, increased by 0.7% in March, swinging from the previous decline of 0.5%. Meanwhile, the month-over-month growth was 0.8%, exceeding the expected increase of 0.6%, swinging from the previous decline of 0.3%.
The European Central Bank (ECB) is anticipated to commence cutting borrowing costs in June. The ECB’s Chief Economist Philip Lane indicated that recent data have increased his confidence that inflation is moving closer to the 2% target. While most ECB officials seem to favor easing next month, President Christine Lagarde has not hinted at further cuts.
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