EUR/GBP remains near cycle highs following a barrage of UK/EU data

The euro-sterling cross failed to react to the recent macroeconomic numbers. As a result, it stayed flat during the London session on Friday, last seen trading at around 0.8580, with a proximity to the cycle highs reached earlier this month.

Miserable UK data

The market research company GfK said that earlier in the day, U.K. consumer confidence hit a historic low, falling 1 point to minus 41 in June, the lowest rating in the survey’s 48-year history.

Moreover, the UK retail sales for May came in at -0.5%, above the -0.7% forecast and the 1.4% before. Core retail sales, excluding vehicle motor fuel sales, were down -0.7% monthly versus -1.0% anticipated and 1.4% prior.

On an annualized basis, UK retail sales fell 4.7% in May, against -4.5% projected and -5.7% the month before, while core retail sales fell by 5.7% (-5.1%) anticipated and -6.9% the month before.

The fall in sales volumes over the month was because of food stores, which fell by 1.6%; reduced spending in food stores seems to be linked to rising food prices and the cost of living.

Despite the miserable data, the GBP remained higher against the US dollar, with the GBP/USD pair advancing to 1.23.

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Additionally, according to data released on Thursday, the Manufacturing Purchasing Managers’ Index (PMI) for the UK fell to 53.4 in June from 53.7 expected and 54.6 in May. On the other hand, the Services PMI maintained its final score of 53.4 from the previous month, staying above expectations of 53.0.

Europe also weakens

In Europe, the German IFO Business Climate Index dropped slightly to 92.3 in June from 93.0 in May and 92.9 in consensus forecasts.

At the same time, the Current Economic Assessment weakened in the reporting month to 99.3 points from May’s 99.5 and 99.1 expected.

The IFO Expectations Index, which represents companies’ expectations for the following six months, surprisingly decreased to 85.8 in June from 86.9 in May and 87.4 in the market prediction.

Following the release, the institute economist Klaus Wohlrabe said that despite increased uncertainty, there are no signs of a recession at the moment. However, the threat of gas shortages has increased companies’ uncertainty.

The next resistance appears at June’s highs of 0.87, while the support could be at 0.85. As long as the cross trades within this range, the immediate outlook could be neutral, implying sideways movement.