Eurgbp Strong After Uk Retail Sale

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Eurgbp Strong After Uk Retail Sale

Eur/Gbp Strong Above 0.8300

EUR/GBP is trading near the 0.8330 handle, with the 0.8300 acting as a support. The cross has turned positive as the recent UK Retail Sales data was disappointing.

Now, the traders are looking forward to the release of the Eurozone PMI along with the ECB's Lagarde speech. Both of these events will provide fresh impetus for the EUR/GBP traders.

Uk Retail Sales Down By 0.7%

According to the data from ONS, the UK Retail Sales declined by 0.7% on a m/m basis during October. This is a big change, considering that September's reading showed an increase of 0.1%.

Overall, the UK Retail Sales was below the market forecast of -0.3%, which is not a good thing. We also can't ignore the fact that the reading has moved from +0.1% to -0.7%.

And if we look at UK Retail Sales without the auto motor fuel sales, it shows a decline of 0.9% m/m during October. Once again, this is below the +0.1% reading from September and the forecast of 0.4% decline.

Technical analysis of EUR/GBP shows that it underwent bullish pressure after the release of UK Retail Sales. So, that's a key reason behind the weakness of GBP against the EUR as of late.

On the flip side, the rumors are growing that the ECB will adopt a more aggressive policy for rate cuts. Recently, the ECB Yannis Stournaras commented that the bank is likely to cut rates by 0.25% in December. For the year 2025, the possibility of rate cuts is also on the table.

The Bank of Italy's Fabio Panetta also stressed the need to cut the rates faster. According to him, that's the only way to provide a lift to the Eurozone's economy.

However, he also also stressed the need to ditch the current guidance system which is based on meeting by meeting. Instead, the ECB needs to make long-term commitment when it comes to the monetary policy.

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