USD strengthens, Pound loses ground

Yesterday saw the US commerce department announced that US retail sales were up 0.1% in April after dropping 0.5% in March (the largest drop seen in 9 months) which saw the USD continue its recent rally and gain ground against the majority of its counterparts, most significantly the Euro and the Pound. Retail spending rose by 0.7%, and with retail spending accounting for 2/3rds of the US economy this data has added momentum the greenback. Certainly this will be seen as very positive for the US, particularly given it recently posted strong jobs data also, which has only aided in returning the USD to being relatively the strongest of the majors and resume it “safe haven status”.
Whilst the USD made gains against the Pound and the Euro, the Euro shaved around half a cent against the pound, ahead of the UK inflation report tomorrow, although it should be noted it has struggled to move outside a 2 cent range over the past few weeks. Certainly since the Cypriot crisis and the recent very positive GDP figures posted in the UK we have not seen a great deal of movement or volatility.
Take note of this drop in Sterling rates – Interestingly this half cent gain came as this morning European Consumer Price Index slightly under anticipated, and also as Cyprus receives its first 2 billion instalment of EU-IMF bailout funds. And against the Dollar it is almost at a 2 week low, despite a lot of positive data recently, including UK house prices being the best they have been in 3 years we are still seeing a downward trend in price of the Pound.
It has been mentioned heavily by analysts that the pound is overpriced and it certainly seems that despite a raft of positive data the pound is still fighting an uphill battle against the dollar and what should be a weak Euro. Without doubt the ongoing fears for Q.E will be weighing on this but looking forward the future strength of the pound should be questioned, as it seems the weakest of these three major currencies.
If you have any upcoming transfers to make, particular involving buying or selling Pounds, make sure you speak to your Currency Index broker to stay well informed and well ahead of the market.