Euro Retreats as Eurozone Retail Sales Disappoint

The Euro has retreated against the Pound Sterling as disappointing retail sales data weighed on the currency. The EUR/GBP cross fell to around 0.8590, down roughly 0.10% on the day, after softer-than-expected numbers from the Eurozone.

Retail sales in July dropped 0.6% month-over-month (MoM), missing forecasts for a 0.3% increase and reversing the previous month's 0.2% gain. On an annual basis, sales rose 0.6%, below the 1.1% forecast and slowing from 1.4% previously.

Bank of England Governor Andrew Bailey offered no new signals on interest rate decisions, stating that policymakers have a choice over how quickly inflation returns to target but stressed it must do so. He also highlighted high debt levels as substantial challenges facing governments and added pressure on bond markets.

Hawkish comments from BoE Chief Economist Huw Pill provided some support to the British Pound, reiterating his preference for raising the Bank Rate to 4%. The policy divergence between the ECB and BoE at upcoming meetings is expected to support the EUR/GBP upside.