GBP/EUR passes €1.17 for first time in a year as UK retail sales impress
Philip McHugh March 29th 2021 - 2 minute read
The pound rallied on Friday as GBP investors cheered the release of the UK’s latest retail sales release.
Sterling appears to be consolidating these gains this morning, with GBP/EUR muted at €1.1684 and GBP/USD flat at $1.3779. GBP/CAD and GBP/NZD have ticked up to C$1.7370 and NZ$1.9744 respectively, while GBP/AUD holds steady at AU$1.8045.
Looking to the week ahead, will a focus on European coronavirus developments leave the euro on the defensive amidst an ongoing rise in new cases?
What’s been happening?
The pound closed last week’s session on a positive note following the publication of the UK’s latest retail sales figures.
Data published by the Office for National Statistics (ONS) reported that sales growth rebounded from -8.2% to 2.1% in February, bolstering hopes for only a modest contraction of GDP in the first quarter.
The euro also received a boost from upbeat data on Friday, with EUR investors welcoming Germany’s strongest business sentiment index reading since June 2019.
However these gains faded by the end of the European session as Germany’s move to impose restrictions on persons crossing the border caused tensions with France and its other neighbouring countries.
The US dollar, meanwhile, was left muted at the end of last week’s session following some lacklustre US economic data, with a larger-than-expected drop in consumer spending and an unexpected slowing of underlying inflation last month.
What’s coming up?
Turning to this week’s session, traders are likely to remain preoccupied by coronavirus developments, particularly in Europe.
This is likely to leave the euro vulnerable to losses as cases in Europe continue to rise, with the single currency particularly susceptible to a sell-off if any more countries are forced to impose a lockdown.
At the same time, GBP investors are likely to keep a close on UK coronavirus statistics this week. Boris Johnson is currently confident that the government’s reopening plan is on track, but any signs that Europe’s third wave has reached the UK’s shore could raise some doubts over this.
Meanwhile, the US dollar may be back on the offensive this week as coronavirus concerns and rising geopolitical tensions are likely to make the safe-haven ‘Greenback’ more appealing to investors.