Anna 
During the European session on Monday, the EUR/GBP pair retraced its recent losses and hovered around the 0.8600 level. The Euro strengthened due to prevailing positive sentiment following robust Retail Sales data from the Eurozone released last week.
In March, monthly Eurozone Retail Sales (MoM) surged by 0.8%, representing the most significant increase in retail activity since September 2022. Additionally, Retail Sales (YoY) showed a 0.7% increase, signaling the first growth in retail since September 2022 and suggesting a positive shift in consumer spending trends.
On the other hand, higher-than-anticipated UK Gross Domestic Product (GDP) figures released on Friday supported the Pound Sterling (GBP) and weighed on the EUR/GBP cross. The UK economy expanded by 0.6% in Q1, surpassing projections and marking the end of the country’s brief recession, demonstrating the strongest growth seen in over two years.
Despite the positive economic data for the UK, the British Pound faced headwinds following dovish remarks from Huw Pill, Chief Economist at the Bank of England (BoE). Pill’s comments echoed sentiments expressed by the majority of the BoE’s Monetary Policy Committee (MPC), who chose to maintain interest rates at 5.25% last Thursday. However, Pill hinted at a growing belief within the committee that rate cuts could be on the horizon.
Looking ahead, market participants are likely to focus on upcoming employment data on Tuesday, with expectations of an increase in the UK Claimant Count Change, indicating more individuals claiming jobless benefits in April. Additionally, the ILO Unemployment Rate (3M) is anticipated to show a rise in the number of unemployed workers in the UK. In the Eurozone, German Consumer Price Index data are expected to remain unchanged for April.
