GBP comes up trumps following shock retail sales

19 December, 2014

Matthew Boyle

This week has been a huge contrast to last with a number of key data releases which always brings movements in the market. Albeit Monday wasn’t a particularly exciting day, it was the quiet before the storm. Tuesday saw UK inflation alongside, a BoE stress test, not to mention the ZEW economic survey for the Euro zone. Despite the majority of UK banks passing the stress test – a slowdown in inflation in the UK saw the pound stumble and at one point during the day’s trading hit a month long low against the single-currency. Wednesday was no quieter in the way of major releases as we saw notably the BoE minutes, UK unemployment figures, EU inflation, and the FED interest rate decision. With a focus largely on UK unemployment following Tuesdays inflation report it showed a slight increase to 6% from 5.9%, however with average earnings increasing all in all it was a slightly mixed bag. Against the Euro the pound seemed to stall somewhat, perhaps as the market readied for another busy day Thursday.

Against the Dollar the pound lost some ground following the decision that US interest rates would remain at 0.25% . Against the Euro the dollar continues its assault.

The most awaited piece of data on Thursday were UK retail sales in the morning, and few would have predicted the results. Retail sales showed a huge growth in what was a totally shock figure – Against the year it showed growth to 6.4%, up from a predicted 4.4% and against a previous 4.6%, whilst for the month it came in at 1.6% , up from a predicted 0.3% and a precious 1.0%. So with a contraction predicted and as such many pricing this in, the market went wild following the result and the pound gained across the board, despite positive Eurozone business climate  data released 30 minutes previous. Against the Euro throughout the day the pound gained over a cent and more so against the Dollar, as in the afternoon US Market Services PMI came in under expectation showing a figure of 53.6 from a predicted 56.9.

This morning we have a raft of Industrial Eurozone data in the morning, UK public sector borrowing mid-morning and US manufacturing activity in the afternoon, so once again a busy day for the majors albeit Canadian CPI data will take centre stage.

Given the surge in GBP rates we have seen many of you with upcoming requirements may like to take advantage given the risk of further data and the always possible snap-back/ correction in rates.

So speak to your currency broker today for some friendly and professional guidance on how to get the most out of your currency transfer – Currency Index can help you stay well informed and well ahead of the market.