Poor UK retail sales no help for the Pound
24 July, 2015
With this being the first week in around a month where the market hasn’t been dominated by what is going on in Europe and Greece, focus returned largely to data to drive the market. The major news of the week was on Wednesday where we saw the Bank of England minutes and monetary policy committee vote. Following Mark Carneys comments last week about an expected rise to UK interest rates in 2016 the pound gained ground, with many awaiting the MPC vote to see if there was any change. The vote remained the same 9-0 against but Carneys comments allowed the pound to gain. It is expected next month that the vote will change, with some predicting as many as potentially 3 members voting for.
Yesterday was a fairly busy day with data coming from the UK, US and Europe and saw a reversal of the pounds recent fortunes. In the morning UK retail sales came in under expectation, which pushed weakness to the pound. This was not helped by news that Greece have now passed the second set of crucial reform bills through parliament and are edging closer to getting the 3rd bailout agreed. Similarly with US jobless claims in the afternoon showing a reduction from expectation, this allowed the US dollar to take advantage and also gain ground against the pound. Throughout the day’s trading the pound lost over 2 cents against the Euro and 1.5 cents against the Dollar. Today we have no data from the UK, with Europe dominating the releases with Markit services data from France, Germany and Italy. In the afternoon we have US Markit services and new homes sales change, and with the pound on the back foot from yesterday further movements will as a result of data elsewhere. So with the tables seemingly turning for Greece as they edge closer to an agreement and the US posting strong results and leading the way for an interest hike, we could see GBP buying rates start to slip.
Certainly worth having a chat with your Currency Index broker if you have a requirement in the coming months, as with so much going on securing a rate now may avoid any slumps in the market and costly increases to your transfer.
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