EUR GBP Steady at Recent Lows After UK Retail Sales

The EURGBP exchange rate was higher on Tuesday but still near recent lows after the UK retail sales rose 2% in December. Activity slowed in the final weeks as Omicron cases rose, and government restrictions played their part. Christmas spending propped up the latest figures and January could be a tougher month for the retail industry.

The EUR to GBP rate was trading at 0.8345 with the recent lows at 0.8332.

UK retail sales seen rising by 2.1% in December

The British Retail Consortium said that UK retail sales grew by 2.1% in December with full year growth coming in at 9.9%.

Paul Martin, UK head of retail for KPMG said that the government restrictions slowed spending in the final weeks of 2021.

Helen Dickinson, chief executive of the BRC, said:

“Despite the recent Omicron outbreak, retail sales held up through December”.

“Many people chose to shop online rather than travel to nearby high streets and shopping centres. Meanwhile, the return of work-from-home advice and reduction in Christmas social events caused formalwear sales to slow”.

However, January could be tough for the high street with footfall at UK outlets dropping in the first week of January in data released yesterday by analysts at Springboard.

Footfall was 6% lower than the week before, with Central London seeing a 25% slump. The decline on high streets was less severe, with market towns down 2.8% and 2% higher in Outer London.

The government’s work from home guidance will continue to impact retail spending and the overall 6% slump was driven by high streets, which saw a 10.9% decline and shopping centres, which saw a 4.4% fall.

Springboard said that Footfall at UK retail destinations was still much lower than in the same week of 2019 – down 21.8%.

Diane Wehrle, Insights Director at Springboard said: “…this is a familiar result in the first week of the year, having occurred every year since 2011, and the magnitude of the drop in footfall last week was almost identical to that in the same week in 2019 and slightly lower than in the same week in 2020.”

European stocks lower as fears of interest rate hikes take hold

European stocks are still under pressure as investors fear rate hikes in the US and beyond. Investment banks Goldman Sachs and JP Morgan see four hikes from the US Federal Reserve this year, alongside $300bn in tapering of the easy money liquidity.

European policymakers have been stubborn over rate hikes but consumer prices were at a new record of 5% last week in the Eurozone, while Germany also saw higher inflation last week.

The Federal Reserve’s Chief, Jerome Powell, will testify to a Senate panel on Tuesday and that could add further pressure to stocks.

The Bank of England has already started its rate hike process with a surprise December move to 0.25%. The ECB will risk the ire of the markets, and Germany in particular, if it tries to bury its head in the sand ahead of the early-February meeting.

Powered by Lumon

The post EUR GBP Steady at Recent Lows After UK Retail Sales appeared first on Euro Rate Forecast.