GBP/EUR: The pair holds steady ahead of UK retail sales
- British Pound (GBP) Leads UK Retail Sales Data
- UK business activity slowed slightly in March
- The euro (EUR) rose after better than expected PMI data
- German IFO business climate data is expected.
Pound Euro exchange rate (GBP/EUR). The pair fell -0.8% in the previous session, settling at €1.1987 on Thursday and after trading in a range between €1.1976 and €1.2025. As of 05:45 UTC, GBP/EUR is trading +0.00% at €1.1986. The pair is on track to gain 0.5% over the week after falling for the past two weeks.
The pound slid in the previous session after the company reported the biggest price hike in more than two decades. The composite PMI, which is considered a good indicator of business activity, fell.
The composite PMI fell to 59.7 in March, from 59.9 in February, an all-time high. But his was still better than the 57.8 analysts had expected. While the services sector saw activity hit its highest level in 9 months, the manufacturing sector fell to its lowest level in 5 months. The outlook continues to deteriorate on concerns about soaring prices and slowing economic growth.
Looking ahead, UK retail sales data is the focus for February. Analysts expect sales to rise 0.8% month-on-month in February, after rising 1.9% in January. Sales are expected to slow as pressure on the cost of living tightens.
The euro gained yesterday after better than expected eurozone activity data and after an EU leaders’ meeting with Biden.
The composite PMI for the euro zone was 54.5 in March, down from 55.5 but ahead of the 54 that analysts had expected. It remains well above 50, the level that separates expansion from contraction.
The data suggests that the spike in energy prices, which was the most visible and immediate impact of the war in Ukraine on the eurozone economy, has yet to really hit activity nor weakened the GDP data.
Today’s focus will be on German IFO business sentiment, which is expected to continue to deteriorate as the Russian war continues. The IFO business confidence index is expected to fall to 94 from 98.9.