Lacklustre UK Retail Report Prompts Uptick in EUR/GBP
The Euro Pound (EUR/GBP) exchange rate looks set to enjoy its fourth consecutive week of gains today as UK Retail Sales figures came in below expectations this morning.
At the time of writing EUR/GBP is up 0.25% from this morning’s opening levels, following the UK’s disappoint retail report.
Pound (GBP) Dented by Poor Retail Sales
The Pound is beating a hasty retreat against the Euro this morning as markets react to the latest UK retail sales figures.
According to data published by the Office for National Statistics (ONS), while retail sales growth rebounded from -1.5% to 0.1% in January, they fell short of expectations of a stronger rally to 0.5%.
The report showed that while there was a strong uptick in sales of sports equipment at the start of the year, food sales saw a strong decline, with observers attributing this to New Year’s resolutions to lose weight.
On top of this analysts seemed pessimistic on the chances of a sustained rebound in sales as consumers remain under pressure from soaring inflation.
Rhian Murphy, Senior Statistician at the ONS said;
‘Retail sales growth was broadly flat at the beginning of the New Year with the longer-term picture showing a continued slowdown in the sector.
This can partly be attributed to a background of generally rising prices.’
Meanwhile the Euro’s gains this morning were supported by a strong than expected uptick in Germany’s latest wholesale price index.
The uptick in wholesale inflation also helped to offset a weaker than expected consumer inflation reading earlier in the week.
EUR/GBP Forecast: Euro (EUR) to Brace for Italian Elections?
Looking ahead to next week the EUR/GBP exchange rate may finally begin to see some movement in preparation for the Italian elections at the start of next month.
Italian’s will go to the polls on the 4th of March to vote on their next government, yet even this close to election day is still unclear who is likely to emerge victorious.
This may prompt EUR investors to strike a more cautious tone over the coming weeks especially given that many of the top contenders have expressed Eurosceptic views.
Meanwhile the Pound may be able to take advantage of a possible pause in the Euro next week with the release of the UK’s latest employment figures.
While unemployment is expected to have held at 4.3% in December, a possible uptick in wage growth could see Sterling advance.