EUR/GBP Rises as Weaker UK Retail Sales Data Hits Pound

The EUR/GBP cross posted modest gains on Friday during the early European session, reaching around 0.8570. This followed weaker UK Retail Sales data, which caused the British Pound (GBP) to edge slightly lower against the Euro (EUR). The disappointing economic data was released by the Office for National Statistics (ONS), showing a decline of 0.5% in July's total volume of goods sold in stores and online.

UK Retail Sales also saw an annual increase of only 1.6% in July, compared to a rise of 3.8% prior and worse than the expected 2.2%. The core Retail Sales, stripping auto motor fuel sales, declined by 0.9% MoM in July.

The Bank of England (BoE) is likely to keep interest rates unchanged at 3.75% for the rest of the year, according to a strong majority of economists polled by Reuters. Meanwhile, financial markets are pricing in a continuation of the European Central Bank's (ECB) hiking cycle, with a 90-94% chance of a 25 basis points hike to 2.50% at the next policy meeting scheduled for September 9.