• EUR/GBP softens to around 0.8655 in Monday’s early European session. 
• German Retail Sales declined by 0.3% MoM in April. 
• BoE’s Bailey signalled there was no urgency to raise interest rates.

The EUR/GBP cross trades in negative territory near 0.8655 during the early European trading hours on Monday. The Euro (EUR) remains weak against the British Pound (GBP) following the upbeat German Retail Sales data. The preliminary reading of the Harmonized Index of Consumer Prices (HICP) from the Eurozone will be released on Tuesday. 

Data released by Destatis on Monday showed that German Retail Sales, a key measure of consumer spending, fell 0.3% MoM in April. This figure followed a fall of 0.3% (revised from -2.0%) and came in better than the market expectation of a 0.4% decrease. 

On an annualized basis, Retail Sales dropped 0.3% in April, versus the prior release of a 0.2% decline (revised from -2.0%). The German economic data fails to boost the EUR in an immediate reaction.   

On the UK’s front, BoE governor Andrew Bailey said on Friday that the UK central bank is in no rush to raise interest rates while the outcome of the Iran war remains uncertain and the UK’s growth rate stays weak.  “We have to monitor the situation in the Middle East and how it affects the UK economy and inflation very closely and adjust policy as required,” said Bailey. 

Money market futures now imply 32 basis points (bps) of tightening this year, one quarter-point hike, and roughly a 30% chance of a second, according to Reuters. 

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