EUR/GBP drops to near 0.8610 on weaker German Retail Sales data, HICP in focus

Highlights:

• EUR/GBP loses ground on weaker than expected German November sales data.
• German retail sales fell by 2.4% on a year-over-year basis and by 2.5% on a month-over-month basis.
• The British Pound may have been supported by improved UK credit and housing data.

The EUR/GBP pair has retreated from its recent highs, trading around 0.8610 in the European session on Friday.

The decline in German retail sales data for November sent the euro lower against the British pound. Retail sales in Germany, which had been expected to fall by 0.1%, actually contracted by 2.4% in November.

According to the data released by the Bureau of Statistics, the monthly sales fell by 2.5%, which was much worse than the expected decrease of 0.1%. The HICP data is expected to be released by the European Union later this month.

Economists expect the inflation data to show an increase due to base effects. This could give the European Central Bank more room to maintain its monetary policy.

The British Pound Sterling gained ground after the data on housing and credit in the United Kingdom was released.

According to the UK Consumer Credit report released on Thursday, borrowing by individuals increased to £2.005 billion in November from £1.411 billion in the previous month. On Friday, the Halifax House Price Index showed a rise of 1.1% in December.

The outlook for the UK’s economy continues to be grim, which could affect the value of the British Pound. According to the latest survey by the Institute of Directors, confidence in the country’s economic situation has continued to decline.

The executives of companies in the UK asked the central bank of the country to lower interest rates in order to support the struggling economy.