EUR/GBP keeps hovering around 0.8650, unfazed by UK consumption data

The Euro (EUR) keeps trading sideways against the British Pound (GBP) on Friday, oscillating within a tight range around the 0.8650 level for the fourth consecutive day, on track for a 0.25% weekly decline. The stronger-than-expected UK  Retail Sales figures released earlier on the day have failed to provide any significant support to the Sterling.

Data released by National Statistics earlier on Friday revealed that retail consumption fell for the first time in the last three months in February, by 0.4%, following a 2% increase in January. The market consensus had anticipated a sharper, 0.8% decline.

Excluding fuel, sales of all other items have shown a similar pattern, falling 0.4% on the month after a 2.2% gain in January, yet remaining above the -0.8% market consensus. Year on year, Retail Sales growth eased to 2.5%, from an upwardly revised 4.8% growth in the previous month, while the Core Retail Sales slowed down to 3.4% from 5.9% in January.

These figures have had a limited impact on the market as they predate the start of the war in Iran. Data from March, which will show the impact of a sharp decline in consumer confidence and a sharp uptick in prices due to the surge in Oil prices, is likely to have more relevance.

The Euro, on the other hand, remains on its back foot, also weighed by the pressure of higher Oil prices in the Eurozone economy. Spain’s Consumer Price Index (CPI) accelerated to 3.3% year-on-year in March, its highest level in 14 months, adding pressure on the European Central Bank (ECB) to hike interest rates in April.