Market Analysis

During early European trading on Tuesday, the EUR/GBP pair is seeing slight gains around 0.8535. 

Notably, German Retail Sales surpassed expectations, with a 0.3% year-on-year increase in March following a 2.7% decline in February. Monthly figures also improved, rising by 1.8% compared to the previous month's 1.9% drop. Despite this positive report, the Euro (EUR) isn't leveraging its strength.

Attention now turns to the release of Q1 Gross Domestic Product (GDP) data for Germany and the Eurozone, alongside the initial reading of the Harmonized Index of Consumer Prices (HICP) for the Eurozone. Should these reports indicate weaker-than-expected results, there's a possibility that the European Central Bank (ECB) could consider earlier interest rate cuts, potentially dampening the EUR.

Meanwhile, Bank of England (BoE) Chief Economist Huw Pill recently cautioned against rushing into interest rate cuts, suggesting that there may be greater risks in doing so too swiftly. 

Despite this, market sentiment still anticipates the BoE's first rate cut in August, with a 50 basis points (bps) reduction expected. This could exert downward pressure on the Cable (GBP/USD) and limit downside potential for the EUR/GBP pair.

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Paraphrasing text from "FX Street" all rights reserved by the original author.