The EUR/GBP cross reached approximately 0.8575 during early trading in the European session on Tuesday, driven by positive economic data from Germany. Investors are now closely watching the upcoming Eurozone Retail Sales report for June, scheduled for release later today.
The Euro’s strength is largely attributed to robust German Factory Orders, which surged by 3.9% month-over-month in June, significantly exceeding the market forecast of 0.8% and recovering from a 1.6% decline in May. This data, published by the Federal Statistics Office, has provided additional momentum for the shared currency.
The Eurozone Retail Sales for June are anticipated to show a modest 0.1% year-over-year increase. An improvement in the retail sector could further support the Euro against the British Pound. Conversely, disappointing retail sales figures might raise concerns about potential European Central Bank (ECB) interest rate cuts in September, potentially weakening the Euro.
On the British Pound front, the Bank of England (BoE) recently cut interest rates by 25 basis points to 5%. BoE Governor Andrew Bailey emphasized a cautious approach, stating that future rate decisions will be made “from meeting to meeting.” Market analysts currently estimate a nearly 55% probability of another rate cut in the BoE’s September meeting.
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