EUR/GBP posts modest gains above 0.8500 following German Retail Sales data
- EUR/GBP snaps the five-day losing streak near. 0.8535 in Tuesday’s early European session.
- German Retail Sales climbed 0.3% YoY in March, compared to a decline of 2.7% in February.
- The cautious approach from the BoE’s policymaker supports the Pound Sterling (GBP).
The EUR/GBP cross posts modest gains around 0.8535 during the early European trading hours on Tuesday. The latest German Retail Sales were hotter-than-expected. Later in the day, the Eurozone Gross Domestic Product (GDP) growth number Q1 and the first reading of the Harmonized Index of Consumer Prices (HICP) will be released.
German Retail Sales climbed 0.3% YoY in March from a decline of 2.7% in February, the Destatis showed on Tuesday. On a monthly basis, the Retail Sales figure rose 1.8% MoM in March, compared to a 1.9% drop in the previous month. Nonetheless, the Euro (EUR) fails to capitalize on the upbeat Retail Sales report.
Looking ahead, investors will focus on the release of Gross Domestic Product (GDP) for Q1 from Germany and the Eurozone, along with the Eurozone inflation data. If the reports show a softer-than-expected outcome, this might allow the ECB to pivot to interest rate cuts sooner and weigh on the EUR.
On the other hand, Bank of England (BoE) Chief Economist Huw Pill warned last week that there were greater risks from cutting the interest rate too quickly, rather than too late. His cautious approach to monetary policy provides some support to the British Pound (GBP). However, investors have priced in the first rate cut from the BoE in August, with 50 basis points (bps) expected. This, in turn, might exert some selling pressure on the Cable and cap the downside of the cross.