Anna 
The British pound faced downward pressure against the US dollar, slipping to 1.2696, following the release of data indicating a sharper-than-expected decline in UK retail sales for April. Sales plummeted by 2.3% on a monthly basis, attributed to adverse weather conditions deterring shoppers from visiting clothing and sports stores across the nation.
Analysts at ING remarked, “Markets are pricing in only 33 basis points of easing by year-end and less than 10 basis points for the August meeting. We still expect an August cut, and see any views for delayed easing due to the U.K. vote as misplaced.”
Meanwhile, the euro exhibited resilience, trading 0.1% higher at 1.0821 against the US dollar. The German economy reported a modest growth of 0.2% in the first quarter of 2024, as confirmed by the statistics office on Friday. Ruth Brand, president of the statistics office, commented, “After GDP declined at the end of 2023, the German economy started 2024 with positive growth.”
Looking ahead, ING analysts suggested, “Given the risk of some hotter eurozone inflation and markets having shown a tendency to look on the brighter side of US price dynamics of late, the coming days may revamp some bullish sentiment on EUR/USD. A return to 1.0900 seems more likely than a drop to 1.0700 in the near term.”
Anticipation mounts for the European Central Bank’s upcoming decision, widely expected to initiate a rate-cutting cycle next month, reflecting ongoing concerns surrounding economic performance and inflationary pressures within the Eurozone.
