The EUR/GBP broke from its two-day losing streak after mixed UK Retail sales data. The pair was trading at 0.85589

EUR/GBP Outlook

Eurozone’s Inflation Concerns

The EUR/GBP inched lower on Thursday after the European Central Bank (ECB) released their monetary policy statement. According to data released on Thursday, the ECB maintained its interest rates. According to the Governing Council, the key ECB interest rates will remain unchanged until inflation hits the 2% target.

The net purchases under the APP will continue at a monthly pace of €20 billion. The Governing Council expects the monthly net purchases to remain unchanged until it starts raising its the key ECB rates. It also stated that it would maintain favorable liquidity conditions.

The Governing Council continue with its €150 billion net asset purchases under the PEPP until the end of March 2022. The ECB vowed to maintain an accommodative monetary policy stance to meet its inflation target.

ECB forecasts a headline inflation of 1.9% at the end of 2021. However, the central bank expects the inflation to decline to 1.5% and 1.4% in 2022 and 2023, respectively. The ECB dovish tone towards its monetary policy calmed market fears.

UK Economic Stance

The EUR/GBP pair remained unchanged after mixed UK Retail sales data. The monthly retail sales volume for June came in higher at 0.5% while the yearly sales advanced 9.7%.

Food stores were the largest contributors to the monthly increase in June 2021. Sales volume in food stores jumped 4.2%. Non-food stores slipped 1.7% in sales volume in the same month compared to May 2021. This was driven by falls in household goods stores.

Automotive fuel sales increased by 2.3% as people increased the amount of traveling. The volume of sales for the three months to June 2021 increased 12.2% and was boosted by the strong sales in April.

The monthly core retail sales for June 2021 came in lower at 0.3%. The yearly core retail sales came in at 7.4% which was weaker than the estimated forecast.

UK’s manufacturing and services Purchasing Managers Index (PMI) will be released later in the day. The manufacturing PMI is expected to come in lower at 62.7 while the services PMI is expected to decline to 62.0.

Leave a Reply

Your email address will not be published. Required fields are marked *

Sign Up for Our Newsletters

Get exclusive content in your inbox.

You May Also Like

EUR/USD Forecast Ahead of US Inflation and Retail Sales Data

The EUR/USD pair surged on Friday after the disappointing US non-farm payrolls (NFP) data. The US will publish the latest inflation and retail sales data.

GBP/USD Forecast with BoE Interest Rate Decision on the Horizon

GBP/USD is seesawing along 1.3800 ahead of the BoE interest rate decision. It is likely to be range-bound between 1.3800 and 1.3900 ahead of the event.

GBP/USD Forecast Ahead of the UK Retail Sales

GBP/USD has eased on its decline ahead of the UK retail sales data. The data comes at a time when UK government postponed reopening by a month.

AUD/USD rebounds as Fed officials downplay inflation fears

AUD/USD is rebounding after Fed officials downplayed the ongoing inflation fears. US retail sales also missed the estimates by remaining stagnant.