22nd October 2010
Good morning. The pound fell again yesterday after poor retail sales, which only added to the view the UK economy is still in a precarious state. Today we'll look at the data this week that's caused the pound to fall. Rates at 08:30am are as follows:
- GBP/EUR 1.1279
- GBP/USD 1.5683
- GBP/AUD 1.5996
- GBP/NZD 2.0969
- GBP/CAD 1.6112
- GBP/CHF 1.5268
- GBP/ZAR 10.876
- GBP/JPY 127.20
- GBP/NOK 9.1934
- EUR/USD 1.3906
Sterling falls on Retail Sales
British retail sales unexpectedly fell for the second month in a row in September, lending weight to the view that the UK economic recovery has peaked. Retail sales are seen as an indicator of consumer confidence, and the low figures suggested that the recovery is still fragile.
As a result, the pound fell yet again to a 5 month low against a basket of major currencies. Versus the Euro, Sterling fell into the €1.12's. Only a few months ago, the rate was at €1.2250 which illustrates how much rates can change in a short period of time.
There are a lot of risks to the UK recovery at the moment; the risk of further stimulus by the Bank of England coupled with the risk that the spending cuts may well push the UK back into recession. It's these reasons that are keeping Sterling weak at the moment, and there's nothing on the horizon that's likely to change that any time soon.
Today's Data
German Business Climate and Current Assessment is released today. It could move GBP/EUR rates. From Canada, Consumer Prices will show how inflation is faring, despite interest rates being low.
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Labels: Retail Sales, Sterling weakness