German retail sales surged 1.8% YoY in May, beating forecasts, but the Euro remains under pressure against the Pound ahead of key inflation data.
The EUR/GBP pair fell to around 0.8605 in early European trading, extending losses despite stronger-than-expected German retail sales. Data showed consumer spending jumped 1.8% year-on-year in May, reversing a 0.6% decline in April and surpassing the 0% forecast. Monthly sales rose 1.1%, defying expectations of a 0.1% drop.
Markets have scaled back European Central Bank rate hike bets as energy prices ease. While some economists expect no further increases, traders still price in a potential 25-basis-point move, lifting the deposit rate to 2.50%. Attention now turns to Germany’s June HICP data, due later Tuesday, for further policy clues.
The British Pound’s resilience follows political pledges from the UK’s likely next prime minister to boost regional growth, though the choice of finance minister remains a key focus for investors.