EUR/GBP consolidates on positive UK Retail Sales and Trump's EU tariff threat

• The British Pound Sterling steadies on upbeat Retail Sales data.
• The Euro pauses as markets digest Trump's 50% tariff proposal on EU imports.
• EUR/GBP rises off seven-week lows with investors closely monitoring developments in major economies.

The Euro (EUR) is trading in a tight range against the British Pound (GBP) after Friday's positive UK Retail Sales data and a resurgence of tariff uncertainty contributed to global risk sentiment.

With EUR/GBP consolidating around the critical level of 0.84 at the time of writing, investors are closely monitoring developments in EU-US trade tensions, which will likely influence the broader economic outlook.

UK Retail Sales surprise to the upside, with German GDP overshadowed by Trump's EU tariff threat

For the United Kingdom, positive Retail Sales data were released on Friday, reflecting an increase in consumer spending in April. The Office for National Statistics (ONS) reported that Retail Sales rose by 1.2% on a MoM basis, beating estimates of 0.2% and far above the negatively revised 0.1% reported in March. 

The robust data raises the prospects that the Bank of England (BoE) may keep interest rates steady in June, allowing the central bank to focus on elevated inflation levels reported on Thursday.

For the EU, recent economic data helped boost demand for the Euro against its peers this week. On Friday, Germany's Growth Domestic Product (GDP) surprised to the upside, with Europe's largest economy growing by 0.4% on the quarter and 0% on an annual basis. Analysts had anticipated a 0.2% increase in Q1, with the economy expected to contract by 0.2% YoY.

However, gains were capped by the US President's post on Truth Social on Friday morning that revealed intensifying trade tensions. Trump proposed a 50% tariff on EU imports starting June 1 due to his frustration with trade negotiations.

As the EU and the UK await further economic data releases that may continue to drive interest rate expectations and growth forecasts, EUR/GBP may continue to consolidate in the short term.