EUR/GBP extends upside to near 0.8750 on EU-US trade deal

• EUR/GBP extends the rally to 0.8740 in Monday's early European session. 
• US and the EU agreed on a framework trade deal on Sunday, supporting the Euro. 
• UK Retail Sales rebounded modestly in July, but were weaker than expected. 

The EUR/GBP cross gathers strength to around 0.8740 during the early European trading hours on Monday. The Euro (EUR) strengthens against the Pound Sterling (GBP) as the European Union (EU) agrees to the United States (US) trade deal ahead of the deadline. The preliminary reading of Gross Domestic Product (GDP) for the second quarter (Q2) from Germany and the Eurozone will take center stage on Wednesday. 

On Sunday, the US and EU agreed on a US tariff on all EU goods of 15%, ending a months-long standoff between two of the world's biggest economic partners. That is half the 30% import levies that US President Donald Trump had threatened to implement starting on Friday. Easing fears of US-EU trade tensions could provide some support to the shared currency in the near term. 

"The trade agreement negotiated by the European Commission with the United States will bring temporary stability to economic actors threatened by the escalation of American tariffs, but it is unbalanced," said France's European Affairs Minister Benjamin Haddad on X.

On the GBP's front, a slowdown in the UK private sector activity, a cooling labor market, and weaker UK Retail Sales data could undermine the Pound Sterling and act as a headwind for the cross. Data released by the Office for National Statistics (ONS) showed on Friday that the UK Retail Sales increased 0.9% MoM in June, versus a fall of 2.7% prior. This figure came in weaker than the market consensus of a rise of 1.2%.