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- EUR/GBP is juggling in a minute range of 0.8520-0.8527 as investors await UK Retail Sales.
- The ECB paddled up its interest rates surprisingly by 50 bps.
- A slippage in UK Retail Sales is likely to weaken the pound bulls.
The EUR/GBP pair is displaying back and forth moves in a narrow range of 0.8520-0.8527 in the early Tokyo session. The cross has turned sideways as investors are awaiting the release of the UK Retail Sales. In the New York session, the asset surrendered its entire gains recorded on an interest rate hike by the European Central Bank (ECB).
ECB President Christine Lagarde unexpectedly announced a rate hike by half a percent vs. expectations of 25 bps. Credit goes to the soaring price pressures which forced the ECB policymaker to feature a jumbo rate hike. Earlier, ECB Large in his testimony guided that the ECB is interested in elevating interest rates by 25 bps in July and later on by 50 bps in September.
Also, the ECB announced a new quantitative tool to support the southern European economies. The new fragmented tool ‘Transmission Protection Instrument’ will provide liquidity to the above-mentioned countries against public securities and also private securities, if required, having a maturity period of 1-10 years.
As per the market consensus, the UK Retail Sales may slip to -5.3% vs. -4.7% recorded earlier. This indicates the vulnerability in the overall demand in the UK. The Retail Sales data is already contaminated with higher price pressures and more damage to the Retail Sales indicates that the overall demand is extremely lower.