Pound Rallies As Britain Spends

Pound Rallies As Britain Spends Yesterday we saw a flurry of activity within the currency markets as the pound got a welcomed boost from the UK retail sales.

The markets opened with news from Germany that the Markit services and manufacturing figures had dropped from last month and further than expected, edging closer to the 50 mark showing contraction in the sectors. This was followed swiftly by the EU figures which were mixed, with the services number missing expectations but manufacturing figures beating them, although only marginally.

Then came the UK retail sectors time to shine and that it did. Posting a raft of above forecast figures, most coming in 1 percent above expectations saw the market sentiment switch elegance from the euro to the pound and the rally ensued. Having initially jumped around a cent against the US dollar and the euro the pound continued to make gains throughout the day. In fact you will see form the table below, whatever your currency exchange was yesterday, it became significantly cheaper as the day went on!

GBP/EUR – 1.06 percent
GBP/USD – 1.27 percent
GBP/AUD – 1.30 percent
GBP/NZD – 1.40 percent
GBP/CAD – 1.40 percent
GBP/JPY – 1.05 percent
GBP/DKK – 1.00 percent
GBP/SEK – 0.85 percent
GBP/NOK – 1.26 percent

The retail sales led the way and nothing else really mattered yesterday. We also had the ECB monetary policy accounts meeting and EU consumer confidence figure which came in at -5.5, followed by a raft of US data including jobless claims, manufacturing PMI, home sales and the Chicago Fed national activity index, but with most of them posting below forecasts, investors had nothing to change sentiment over.

So onto today as the week winds to a close before the long Bank Holiday weekend and we have another busy day of ecostats. For the UK we have public sector borrowing this morning and a speech by Bank of England governor Mark Carney at lunchtime. For euro buyers we have German GDP and two speeches by ECB president Mario Draghi to contend with (one first thing and one at lunchtime) whilst after lunch we have US inflation alongside Canadian inflation and retail sales figures.

A busy day, with some key central bank speeches going on which shouldn’t be taken lightly. The pound is riding high against the euro and last time that happened Mark Carney was quick to shoot it down, citing inflationary concerns as the issue. With inflation dropping to a negative reading earlier in the week, I personally feel there is a strong possibility it will happen again and the gains could be wiped off. Either way, until later no one knows what will happen for sure, so if you have a currency transfer to make either get it done this morning and avoid the risk, or gamble and wait to see what happens. Either way, the team at CI are here to help as and when as always!