Good news arrived for the UK economy this morning with the BRC retail sales monitor on the up. This has indicated that following the nation hibernating inside during December (creating a shocking 0.8 percent decline in retail sales during the festive season), the UK made up for this thriftiness in January heading back out to shops and driving up retail sales by 2.3 percent. This is also an early indication that the VAT rise may not have had as much negative impact on consumers as some had expected and future data releases will confirm whether this is the case. Sterling has strengthened against the Dollar but lost out to the Euro as Thursday’s Bank of England meeting makes investors cautious.
Speak to your broker before Thursday if you would like to know how market movement could affect your Sterling transfer.
Pound Sterling – UK Markets
Sterling has continued this week’s rise against the US Dollar but has fallen back against the Euro as economists suggest that the run up to the Bank of England interest rate decision on Thursday could subdue Sterling before the announcement.
Data this morning however has been positive with retail sales rebounding in January following the weather-induced drop in December. The BRC sales monitor registered a rise of 2.3 percent which was much improved from the December figure of a decline of 0.8 percent. This will not only ease any lasting market concerns about the impact of VAT on retails figures but alongside a better report from the Royal Institution of Chartered Surveyors on the housing market has suggested that things could be looking a little brighter in the UK economy.
US Dollar – US Markets
The Dollar index registered falls yesterday although there is more data on the horizon that could help the Dollar should it come in positively. US small business confidence is expected to improve which coming after last week’s rise in employment could help build better sentiment about the economy.
Monetary policy in the US is also being mused over as Federal Bank of Dallas President Richard Fisher commented that he is unlikely to support any further quantitative easing.
Tomorrow sees some crucial data in the form of US mortgage applications as well as Bernanke’s press conference on how the Federal Reserve view the current state of the economy with comments able to influence the currency depending on the stance that they take.
Euro – European Markets
German factory orders data fell by 3.4 percent yesterday morning and subsequently pulled the Euro down. Markets now await German industrial production figures this morning followed by the trade balance tomorrow morning. The Euro hit a two week low following the data yesterday so it will be interesting to see whether this morning’s industrial production is as equally disappointing and whether the predicted 0.2 percent growth rate will be achieved.
Should the figures under-achieve this may begin to suggest that the strongest economy is Europe is slowing down and have a negative affect on the Euro.
Other Currencies – Highlights
The Canadian Dollar which had reached a two year high against the US Dollar has now fallen as crude oil prices dropped affected by ongoing tensions in Egypt.
The Canadian currency had originally strengthened in response to growing employment figures for January with four times as many jobs being added than was expected. Internally therefore, the Canadian economy shows signs of strength but as ever is vulnerable to uncertainty in the wider global markets and in particular the effects on commodity prices.
For a live quote or to tell us about your foreign exchange requirements, please call us on +44 (0)20 7740 0000.
US Dollar Continues to Outperform European Rivals
Pound falls further
British Pound Suffers Losses Ahead of Tuesday's Critical Vote