EUR/GBP retreats from 0.8570 on weak German Retail Sales

• EUR/GBP faces sell-off near 0.8570 on poor German Retail Sales for February.
• Monthly German Retail Sales surprisingly dropped by 1.9% against expectations of 0.3% growth.
• BoE Haskel sees rate cuts are far away.

The EUR/GBP pair falls back from 0.8570 as German Retail Sales data for February remains weaker than expected. Monthly Retail Sales surprisingly contracted by 1.9% against the consensus of 0.3% growth. In January, Retail Sales dropped by 0.4%. Annually, sales at retail stores were declined at a higher pace of 2.7% against expectations of -0.8% and the former decline of 1.4%.

The Retail Sales data is an indicator of the current status of consumer spending, which accounts for a major part of the economy. Weak Retail Sales data indicates deepening cost of living crisis due to high interest rates by the European Central Bank (ECB).

Poor Retail Sales could force ECB policymakers to discuss more about reducing interest rates early. Weak German Retail Sales tend to influence ECB policymakers heavily as it is the largest economy of Eurozone in term of Gross Domestic Product (GDP). ECB policymaker Madis Muller said on Tuesday that “we’re closer to a point where ECB can start cutting rates.” Easing wage growth has fuelled ECB’s rate-cut expectations for the June meeting.

Meanwhile, the Pound Sterling remains unchanged even though Bank of England (BoE) policymaker Jonathan Haskel delivers a hawkish guidance on interest rates. BoE Haskel said on late Wednesday to the Financial Times that rate cuts should be “a long way off.” Haskel warned that, “fall in headline inflation is good news. However, he doesn’t think the headline figures give a good guide to the persistence.”