Ella 
EUR/GBP held on to modest gains around 0.8420 during the Asian session following Friday’s UK retail sales data. Data from the Office for National Statistics (ONS) showed that retailers’ merchandise sales fell by 1.2% in June compared with the previous quarter, reversing the 2.9% growth momentum in May. A 0.4% decline is expected.
UK retail sales fell 0.2% year-on-year in June, after rising 1.3% in May. Core retail sales in June also fell 0.8% from the same period last year, and the previous value increased 1.2%, lower than expected. Additionally, the GfK consumer confidence index fell to -13 in July from -14, below expectations of -12.
The final value of British consumer price index (CPI) inflation released on Wednesday was in line with expectations, and investors have ruled out the possibility of an interest rate cut by the Bank of England (BOE). However, UK Producer Price Index (PPI) inflation fell more than expected, putting sterling temporarily under pressure.
In terms of the euro, Germany’s producer price index (PPI) increased by 0.2% in June from the previous quarter, exceeding the expected growth of 0.1%. PPI fell by 1.6% year-on-year in June, in line with expectations and an improvement from the previous decline of 2.2%.
On Thursday, the European Central Bank (ECB) decided to keep its main refinancing rate at 4.25% at its July monetary policy meeting, as expected. The ECB’s deposit facility rate was also kept unchanged at 3.75%.
According to Reuters, at a press conference after the interest rate decision, European Central Bank President Christine Lagarde said: “The question about September and what we do in September is open.” Gard also noted that the monetary policy decision was unanimous and stressed the central bank’s commitment to relying on a range of data rather than any single data point.
