- British Pound (GBP) Rises After Strong Retail Sales
- BRC LFL sales jumped 8.1%
- Euro (EUR) eases further after Lagarde pullback
- German trade balance and Italian industrial production due
The Pound Euro exchange rate (GBP/EUR) is up for a third consecutive day. The pound rose 0.3% on Tuesday to settle at €1.1862 after hitting €1.1887 earlier in the session. As of 05:45 UTC, GBP/EUR is trading +0.05% at €1.1868.
The pound continued its recovery on Tuesday, boosted by upbeat data. According to the British Retail Consortium, retail sales jumped in January as consumers hit stores. Total sales rose 11.9% last month, a significant increase from the 1.3% drop reported in January 2021 when Britain went into lockdown.
On a like-for-like basis, retail sales increased by 8.1% over one year. It should be noted that sales were so strong, in January which is traditionally a slow month and even when inflation was at its highest level in 30 years. However, these price increases could depress sales going forward as households need to tighten their purse strings.
Also with people returning to the office, inner city retailers could see a recovery as long as consumer confidence remains optimistic.
Today there is no high impact UK data, so the Euro could be the driving force for the pair.
The euro continued to slide yesterday as words from European Central Bank President Christine Lagarde continued to weigh on demand for the common currency. After a hawkish turn last week, Lagarde returned this week with significantly less hawkish rhetoric, suggesting the ECB would not tighten policy significantly as inflation returned to the 2% target level.
Looking ahead, there are no high-impact economic data on the Eurozone to release. The focus will be on second level data such as the German trade balance and Italian industrial production. Germany’s trade balance is expected to fall to 10.4 billion euros in December, from 10.9 billion euros in November.