Euro Surges Past GBP as UK Retail Sales Beat Expectations

The Euro (EUR) has continued its rally against the British Pound (GBP), despite strong UK Retail Sales data for June. The EUR/GBP pair reached a two-week high of near 0.8550 in the European trading session on Friday.

According to the Office for National Statistics (ONS), Retail Sales rose strongly by 1% Month-on-Month (MoM) in June, exceeding expectations of a 0.3% decline. On an annualized basis, Retail Sales grew at a pace of 4.2%, higher than anticipated.

Investors expect the strong UK Retail Sales data to prompt Bank of England (BoE) interest rate hike expectations for the near term. However, upcoming PMI data may introduce volatility in the British currency. The European Central Bank (ECB) left interest rates unchanged on Thursday, warning that the energy shock will continue to feed into higher prices.

The S&P Global Composite PMI is expected to arrive at 49.7 for July, slightly higher than June's reading of 49.3. A figure below 50 indicates a contraction in business activity, which could be bearish for the GBP.