On Friday, the EUR/GBP currency pair continued to trade sideways, hovering around the 0.8650 level for the fourth consecutive day and heading for a 0.25% weekly decline, despite the release of UK Retail Sales data earlier in the day [1]. The UK Office for National Statistics reported that retail consumption fell by 0.4% in February, marking the first decline in three months, following a 2% increase in January. This result was better than the market consensus, which had anticipated a sharper 0.8% drop [1]. Excluding fuel, retail sales also fell by 0.4% after a 2.2% gain in January, again outperforming the consensus of a -0.8% decline. Year-on-year, Retail Sales growth eased to 2.5%, down from an upwardly revised 4.8% in the previous month, while Core Retail Sales slowed to 3.4% from 5.9% in January [1].
Despite these figures, the market reaction was muted, as the data predates the onset of the war in Iran. Analysts suggest that March data, which will reflect the impact of declining consumer confidence and rising prices due to surging Oil prices, will be more significant for market participants [1]. The Euro remains under pressure, affected by higher Oil prices in the Eurozone. Notably, Spain’s Consumer Price Index (CPI) accelerated to 3.3% year-on-year in March, its highest level in 14 months, increasing pressure on the European Central Bank (ECB) to consider an interest rate hike in April [1].
The Retail Sales data is a key indicator of consumer spending in Great Britain, with monthly changes closely watched by market participants. Typically, stronger readings are seen as bullish for the Pound Sterling, while weaker readings are bearish. However, the current data has had limited impact on the EUR/GBP exchange rate, which remains largely unchanged [1].
CONCLUSION
The EUR/GBP pair has shown resilience, remaining stable despite a modest decline in UK Retail Sales and rising inflation in the Eurozone. Market participants are awaiting March data for clearer signals, especially given recent geopolitical developments and oil price surges. For now, the market impact remains low, with both currencies largely unfazed by the latest economic indicators.