EUR, GBP flows: Weak German retail data puts some downward pressure on EUR

The UK revised Q4 GDP data were in line with expectations, confirming an H2 2023 recession with a 0.3% q/q decline in Q4, and has produced no market reaction. However, we have also had German February retail sales this morning, which has shown the fourth consecutive m/m decline, taking the 3m annualised trend to its lowest for a year at -4.6%. The contrast between the solid growth being seen in the US and the weakness in Europe continues, but has thus far not produced any significant deviation in policy expectations, with the inflation trends largely being determined by global supply factors rather than local demand trends. This may change in the coming months, and could lead to USD gains if it does, but for now the impact on the USD is likely to be quite mild, with some downward pressure on EUR/USD towards the 1.08 support area.