Euro holds losses against British Pound despite stronger Germanys’ Retail Sales data

The EUR/GBP cross trades in negative territory around 0.8605 during the early European trading hours on Tuesday. The Euro (EUR) remains weak against the British Pound (GBP) despite the upbeat Germany’s Retail Sales data. Traders will take more cues from the preliminary reading of Germany’s Harmonized Index of Consumer Prices (HICP) for June, which is due later on Tuesday.

Data released by Destatis on Tuesday showed that Germany’s Retail Sales, a key measure of consumer spending, jumped 1.8% year-on-year (YoY) in May, versus a fall of 0.6% prior (revised from -0.3%). This figure came in better than the market expectation of 0%.

On a monthly basis, the consumer spending measure rose 1.1% in May, compared to a 0.4% decline in April (revised from -0.3%), stronger than the forecast of -0.1%.

Markets have pared expectations for future rate hikes from the European Central Bank (ECB) this year as energy prices retreat. Oxford Economics and Capital Economics expect the ECB won’t raise the interest rates further, though traders are still pricing one more quarter-point move, which would bring the deposit rate to 2.50%.

UK’s likely next Prime Minister vowed on Monday to deliver radical change to the nation's politics by handing more power to its regions and by encouraging collaboration over argument in a 10-year mission to spur "good" growth. Traders will closely monitor the choice for finance minister, which could prove crucial to the outlook for both the pound and the gilt market. Burnham said any economic plans would be "backed by discipline" and abide by current fiscal rules.