The EUR/GBP currency pair settled below Friday’s high of 0.8743, its strongest level since November 21st 2023, in the wake of the European Central Bank’s policy decision and as the latest UK data shifted focus from inflation to growth worries.
The ECB left its main refinancing operations rate intact at 2.15%, while the deposit facility rate was kept at 2.0%.
Borrowing costs have been brought to their lowest levels since November 2022 after eight consecutive rate cuts.
ECB policy makers have adopted a wait-and-see approach, as they evaluate the impact of lingering trade uncertainty and the potential fallout from US tariffs on GDP growth and inflation.
In June, Euro Area’s inflation aligned with the ECB’s 2% target.
Meanwhile, UK retail sales rebounded only 0.9% in June, after a 2.8% slump in May.
And, retail sales, excluding autos and fuel, went up just 0.6%, falling well short of forecasts of a 1.2% growth.
Those figures, coupled with weak PMI data, added to expectations that the Bank of England would likely prioritize supporting growth over tackling inflation.
The EUR/GBP currency pair settled 0.49% higher at 0.8735 on Friday.
The minor Forex pair gained 0.84% for the week.
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