GBP/EUR Reaches Yearly High After ECB Rate Cut, UK Retail Sales Show Growth
GBP
GBP/USD is currently trading at 1.3035 (interbank), while GBP/EUR stands at 1.2025 (interbank) after reaching a 52-week high.
The Pound is stronger, following stronger-than-expected UK Retail Sales data for September.
Retail Sales, a key indicator of consumer spending, rose by 0.3% month-on-month, beating the expected 0.3% decline. Annually, Retail Sales increased by 3.9%, higher than the forecast of 3.2% and August’s revised reading of 2.3%. Core Retail Sales, excluding motor fuel, also grew by 0.3% on a monthly basis and 4.0% year-on-year.
The upbeat data may reduce the number of rate cuts by the BoE, which had gained traction after Wednesday’s CPI data showed inflation falling below the BoE’s 2% target.
Today’s Events (GMT+1):
07:00 - Retail Sales (Sep) – Actual: 3.9% vs Forecast: 3.2%
07:00 - Core Retail Sales (Sep) – Actual: 4.0% vs Forecast: 3.2%
EUR
EUR/USD has declined to 1.0842 (interbank) after hitting a fresh 10-week low near 1.0800 yesterday.
Yesterday, the ECB’s widely expected 0.25% rate cut brought the deposit rate to 3.25% and the main refinancing rate to 3.40%. The central bank’s decision was based on an updated assessment of inflation, indicating that price pressures are expected to ease further compared to last month’s forecast.
In the post-meeting press conference, ECB President Christine Lagarde provided no clear signals about potential rate actions in December but expressed confidence in the ongoing disinflation process.
Nevertheless, traders have already priced in another 25-bps rate cut for the ECB’s final meeting of the year.
No significant events are scheduled for today.
USD
The Dollar Index, which measures the U.S. dollar against a basket of six major currencies, is currently at 103.66.
The U.S. dollar surged to its highest level in over two and a half months on Thursday, following stronger-than-expected U.S. retail sales data, adding to recent signs of resilience in the U.S. labour market.
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As a result, traders have largely priced in expectations of a 25-basis-point rate cut by the Federal Reserve in November, a smaller reduction compared to the Fed’s initial rate cuts in September.
Additionally, the growing likelihood of a Donald Trump victory in the upcoming presidential election has boosted the dollar, as his policies are expected to include dollar-supporting trade tariffs.
Today’s Events (GMT+1):
14:30 - FOMC Member Bostic Speaks?
15:00 - FOMC Member Kashkari Speaks
17:10 - Fed Waller Speaks
CAD
USD/CAD remains steady, trading at 1.3795 (interbank).
Meanwhile, the Canadian Dollar continues to weaken as the BoC is expected to announce another interest rate cut next Wednesday.
The BoC has already reduced its borrowing rate by 75 basis points to 4.25% this year. Further rate cuts seem likely as inflationary pressures in Canada have eased and the economy is not operating at full employment.
Canada’s unemployment rate fell to 6.6% in September, a faster decline than expected but still well above the central bank’s 5% target.
Oil prices have edged higher, with Brent crude up 0.2% to $74.60 per barrel and West Texas Intermediate rising to $70.32 per barrel.
No significant events are scheduled for today.
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