During the early European trading hours on Tuesday, the EUR/GBP cross maintains a modest uptrend around 0.8535. This follows the release of German Retail Sales figures, which surpassed expectations. However, the Euro struggles to capitalize on the positive data.
According to data from Destatis, German Retail Sales recorded a 0.3% year-on-year increase in March, rebounding from a 2.7% decline in February. Additionally, on a monthly basis, Retail Sales rose by 1.8% in March, contrasting with the 1.9% decrease observed in the previous month.
Despite the encouraging Retail Sales report, the Euro fails to gather momentum. Investors now turn their attention to key economic indicators scheduled for later in the day, including the first-quarter Gross Domestic Product (GDP) data from Germany and the Eurozone, as well as the initial reading of the Harmonized Index of Consumer Prices (HICP).
Market participants keenly await these releases, as softer-than-expected outcomes could potentially prompt the European Central Bank (ECB) to consider interest rate cuts sooner than anticipated, thereby exerting downward pressure on the Euro.
Meanwhile, Bank of England (BoE) Chief Economist Huw Pill’s recent remarks cautioning against hasty interest rate cuts offer some support to the British Pound (GBP). Despite this, market expectations for a rate cut from the BoE in August, with a projected 50 basis points reduction, may limit the downside of the EUR/GBP cross.
