UK retail sales, could throw up some volatility should they miss the mark

Thursday was a fairly flat day for trading, with the pound spending most of the day trading within a very thin range across the board.

When US retail sales were released in late afternoon, although it came out with a solid figure for December, the previous months downgrade showed slower sales figures for the year overall than analysts were expecting and led to some dollar weakness. As a result, we saw sterling make half a cent gains against the greenback, but also dragged up against the euro, again making half a cent gains to some of the best buying rates this year.

As we head to the month end, and the British exit from the EU, we also have to take note of the Bank of  England MPC meeting the day before. On the 30th members meet to decide on the direction of interest rates, with a few members talking of rate cuts, in addition to the two members who have already been voting for a cut in the last two meetings.

Those with a knowledge of markets will be aware that lower interest rates generally mean lower exchange rates because from an investor point of view, if interest rates are set to go down, they would get less return by holding that currency and so sell off their holding, for a higher yielding currency.  If a currency is sold off, it’s value dilutes and it becomes weaker.

So those with sterling to sell in the coming weeks would be prudent to be mindful of this and the potential risk they run by waiting for the BoE meeting on the 30th. To discuss your options ahead of the meeting, speak to one of our consultants today.

Today we see UK retail sales, which could throw up some volatility should they miss the mark. It’s been widely reported that Christmas sales were lower than expected so we could see this evidenced by this mornings figure at 9.30am. Following shortly after at 10am is EU inflation with US housing data, industrial production figures and a consumer sentiment survey with a few Fed member speeches scattered throughout the afternoons trade.

To avoid any pitfalls from the days data, or indeed longer term risk from the BoE, give the team a call today to secure your upcoming currency requirement.