During Monday’s European session, EUR/GBP maintained its position around 0.8600, retracing losses incurred in the previous session. The Euro exhibited strength buoyed by positive sentiment stemming from robust Retail Sales data from the Eurozone last week.
The monthly Eurozone Retail Sales (MoM) recorded a notable surge of 0.8% in March, marking the most substantial uptick in retail activity since September 2022. Similarly, Retail Sales (YoY) also demonstrated growth of 0.7%, signaling the first positive shift in consumer spending trends since September 2022.
Conversely, the Pound Sterling (GBP) faced headwinds following the release of higher-than-anticipated UK Gross Domestic Product (GDP) figures on Friday. The UK economy expanded by 0.6% in Q1, surpassing expectations and signaling the end of a brief recession. This robust economic rebound marked the most vigorous growth witnessed in over two years.
Despite the positive GDP figures, GBP encountered pressure following dovish commentary from Huw Pill, Chief Economist at the Bank of England (BoE). Pill echoed the sentiments of the majority of the BoE’s Monetary Policy Committee (MPC), who opted to maintain interest rates at 5.25% last Thursday. However, Pill hinted at a growing inclination towards potential rate cuts in the future.
Market participants are poised for the release of employment data on Tuesday, with expectations of the UK Claimant Count Change indicating a rise in individuals claiming jobless benefits in April. Additionally, the ILO Unemployment Rate (3M) is anticipated to reflect an increase in unemployed workers in the UK. In the Eurozone, German Consumer Price Index data for April are expected to remain unchanged across all indicators.
