The Pound strengthened against the US Dollar, despite the disappointing UK retail sales data which was released by the Office for National Statistics (ONS). The ONS survey showed that retail sales fell by 1.5% in December, much more than the 0.6% drop that economists had forecast. Market analysts said that consumers preferred to do their purchases on Black Friday rather than wait for the Christmas period.

In the US, Republicans will try to avert a government shutdown tonight. The House of Representatives voted in favour of a short-term spending bill yesterday, but Democrats said that they have the number of necessary votes to block it in the Senate. In the Eurozone, the current account surplus increased in November after two months of decline according to data shared by the European Central Bank (ECB).

Pound Sterling – UK Markets

Today, the Pound edged up against the US Dollar with the exchange rate set at $1.39. Sterling lost ground against the Euro with the exchange rate set at €1.13. The Pound to Dollar exchange rate fell momentarily under the $1.39 mark when the UK’s retail data was published, but quickly rebounded back to post-Brexit vote highs.

The ONS report regarding UK retail sales in December was rather disappointing. Retail sales increased by only 1.4%, on a year-to-year basis, missing analysts’ expectations for a 3.0% rise. On a month-to-month basis, retail sales declined by 1.5%, which was a much larger drop that the -0.6% that economists had been anticipating. Analysts at ONS said that “consumers continue to move Christmas purchases earlier with higher spending in November and lower spending in December than seen in previous years.”

French President Emmanuel Macron rejected the idea of a tailored Brexit deal which would allow City firms to access European Union markets. In his remarks, after the UK-France Summit in Sandhurst, Macron noted that “if Britain wants full access to the single market, including financial services, be my guest. But you need to contribute to the budget and acknowledge European jurisdiction. Such are the rules.” Theresa May replied that the City will continue to be a major financial centre, which would be also good for Europe and the global financial system.

US Dollar – US Markets

The US Dollar slumped against the Euro with the exchange rate set at €0.81. The US Dollar Index (DXY), which measures the strength of the Dollar against six major competitor currencies, edged lower coming in at 90.31, which is very close to a 3-year low. The Baker-Hughes Oil Rig Count survey is the most important economic data release of the day.

A US government shutdown is looming as temporary government funding runs out on Friday night and the Senate still hasn’t passed a temporary extension. The House of Representatives passed a short-term spending bill in order to avoid the shutdown. The bill was sent to the Senate where at least sixty senators must vote in favour of it. Democrats said that they have enough votes to block the bill in the Senate.

The US Securities and Exchange Commission (SEC) expressed worries about significant issues regarding cryptocurrency ETF plans. SEC noted in a statement that it wouldn’t approve cryptocurrency ETFs unless outstanding concerns were addressed. Two main issues raised by the SEC were the extreme volatility of the cryptocurrency market and questions about funds’ liquidity with products such as Bitcoin, Ethereum, Litecoin; etc.

Euro – European Markets

The Euro jumped against the US Dollar, gaining 0.3% in value, with the exchange rate set at $1.22. The German producer prices and the Eurozone’s current account data are the most significant releases for today.

Data published by the European Central Bank (ECB) showed that the Euro-bloc’s current account surplus increased in November after dropping for two straight months. More specifically, the ECB report said that the surplus increased to €32.5bn from €30.3bn in October. The surplus on trades in goods increased by €5bn on a month-to-month basis, while the surplus on services decreased by €2bn.

In Germany, producer price inflation eased in December, according to a report published by Destatis. Producer prices increased by 2.3% in the last month of 2017, on an annualised basis. The figure was in line with expectations, but it should be noted that in November the figure recorded was 2.5%. On a month-to-month basis, producer prices in the strongest economy of the Eurozone climbed by 0.2%, matching expectations.

Other Currencies – Highlights

Sterling inched lower against the Australian Dollar, trading at 1.73 AUD. A Reuters poll showed that the majority of economists believe that the Australian GDP will expand by 2.8% this year and 2.8% more in 2019. The results of the poll suggested that economists expect only a very gradual pickup in price pressures ahead. Inflation is forecast to reach 2.2% this year and 2.3% in 2019.

The Pound surged against the New Zealand Dollar, trading at 1.90 NZD. BNZ presented its Business PMI survey for December with results being rather disappointing. In the last month of 2017, the Business PMI hit a six-year low coming in at 51.2. In November, the recorded PMI figure was 57.7. The 6.5 point-drop between November and December has been exceeded twice before, with one occasion being during the financial crisis of 2008.

Sterling slumped against the Swiss Franc, trading at 1.32 CHF. Producer prices in Switzerland picked up by only 1.8% in December, on a year-to-year basis, missing analysts’ expectations who anticipated a 2.1% rise.