GBP/EUR Exchange Rate Slips amid Disappointing UK Retail Sales
The Pound Euro (GBP/EUR) exchange rate is falling during today’s session as UK’s retail sales print much lower than forecast.
At the time of writing, the GBP/EUR exchange rate is trading at approximately €1.1962, down roughly 0.4% from today’s opening levels.
Pound (GBP) Faces Headwinds as UK Retail Sales Fail to Reach Predictions
The Pound (GBP) is losing ground against the Euro (EUR) this morning following the release of disappointing UK retail sales.
December’s UK retail sales printed at -3.7%, a significant drop from both the previous reading and market forecast of 1% and -0.6%, respectively.
This is the largest decline in 11 months, and has been mainly caused by the Omicron variant which drove consumers to purchase Christmas shopping earlier than usual amid reports of supply chain issues.
Heather Bovill, ONS deputy director for surveys and economic indicators, said:
‘After strong pre-Christmas trading in November, retail sales fell across the board in December, with feedback from retailers suggesting Omicron impacted on footfall.’
In addition, the ‘partygate’ scandal continues to weigh on GBP’s appeal as the future of Boris Johnson’s position remains uncertain as Sue Gray’s investigation dominates headlines.
On the other hand, Johnson’s recent announcement that the Plan B restrictions will be lifted next week is limiting Sterling’s losses.
Health Secretary Sajid Javid said:
‘This is a moment we can all be proud of. It’s a reminder of what this country can accomplish when we all work together.’
Euro (EUR) Boosted by Risk-Off Sentiment
The Euro (EUR) is rising against the Pound (GBP) during today’s session as it benefits from the risk-off market mood which is causing investors to shy away from riskier-assets, such as GBP.
The risk-off mood is in response to the growing conflict between Russia and Ukraine.
This afternoon, Russia and the US are together in Geneva in effort to ease the current fears surrounding Russia’s potential action plan, although US Secretary of State Antony Blinken doesn’t expect to ‘resolve our differences here today’.
Presently, Russia denies plans to invade Ukraine despite having positioned 100,000 troops on the Moscow/Ukraine border.
The US President, Joe Biden, has said that Moscow would ‘pay a heavy price’ should any Russian troop step over the boundary line.
This is causing investors to favour the safer currencies as geopolitical tensions continue to build, with the future of the situation uncertain.
In addition, the single currency is likely to be further bolstered by January’s flash consumer confidence scheduled for release this afternoon which is forecast to improve from -9 to -8.3.