Euro Trades Flat as UK Retail Sales Boost GBP
The Euro trades flat against the British Pound after stronger-than-expected UK Retail Sales data provided some support to the GBP. The Office for National Statistics reported that UK Retail Sales rose 0.5% MoM in August, beating forecasts of a 0.2% decline.
On an annual basis, sales increased 2.4%, surpassing expectations of 1.9%. Retail Sales excluding fuel also rose 0.6% MoM and 2.7% YoY.
The Bank of England's (BoE) decision to keep interest rates unchanged at 3.75% for the sixth straight meeting weighed on the Pound, despite BoE Governor Andrew Bailey keeping the door open to future rate hikes.
Brown Brothers Harriman's Elias Haddad points out that market pricing for the Bank of England remains aggressive, with 'the swaps curve continues to imply about 100bps of BoE rate hikes in the next twelve months to 4.75%.' However, BBH argues 'the BoE may not need to tighten as much as markets expect,' given that 'the UK economy is already operating below capacity.'