Pound Sterling Buffeted by Upbeat Retail Report
Sterling got off to a decent start yesterday as traders cheered the latest retail report from the Confederation of British Industry, however, the Pound failed to maintain most of its gains as weak rate hike expectations weighed.
The CBI survey showed that retail sales rose to a three-month high in July, jumping from an index of +12 to +22. Summer clothes and groceries contributed strongly to the figure, while job creation and expectations for August also impressed. The report is not seen as a high importance release and subsequently traders opted not to push Sterling too much higher following the strong reading.
Pound to Euro Exchange Rate Touches 1-Week High
The Pound to Euro exchange rate rallied by around 75 pips yesterday morning to reach a one-week high as the sturdy CBI retail report bolstered demand for Sterling. However, GBP/EUR bounced lower on technical resistance, indicating that market sentiment currently favours the single currency.
The Pound has attempted to rally versus the Euro on a couple of occasions over the past week but ultimately each effort has thus far ended in failure. While the BoE is not expected to start raising rates anytime soon due to the recent downshift in inflation and lacklustre growth, speculation over an unwinding of the European Central Bank’s quantitative easing scheme has give the Euro a shot in the arm.
The Euro is trading at a two-and-a-half-year high versus the US Dollar and close to eight-month highs versus the Pound, thanks, in part, to the ECB tightening rumours.
Pound to US Dollar Exchange Rate Touches 10-Month High Ahead of US GDP Report
‘Cable’ touched a new 10-month high yesterday following the positive UK CPI retail sales report. But demand for the US Dollar increased during the afternoon, when it was reported that US durable goods orders smashed expectations in June.
GBP/USD lost around a cent yesterday afternoon following news that orders for long-lasting US factory goods rose at the fastest pace for almost three years last month. The whopping 6.5% expansion smashed forecasts of 3.9% and marked an all-mighty rebound from March’s -0.1% contraction.
Durables are usually expensive to purchase and therefore the survey is considered a good barometer of consumer sentiment, as individuals and firms are unlikely to make big buys during a downturn.
The big event for the ‘Greenback’ today is the second quarter US GDP report, which is tipped to see an acceleration from 1.4% to 2.6% that could benefit the US Dollar.
GBP/CAD Rallies 100 Pips on BoC Government Backlash Rumours
The Pound to Canadian Dollar exchange rate appreciated by around a cent yesterday as traders reacted to dark mutterings that some members of Justin Trudeau’s government were upset that the Bank of Canada recently raised rates.
The anonymous source contends that ministers are worried about the BoC’s apparent hiking cycle as ‘higher borrowing costs could inadvertently trigger a downturn’.
The speculation weighed on the ‘Loonie’ ahead of this afternoon’s May GDP report, which is expected to see monthly Canadian growth remain at 0.2% and the yearly figure jump from 3.3% to 4.2%.
Pound to Australian Dollar Exchange Rate Up as UK CPI Retail Index Improves
The Pound to Australian Dollar exchange rate ticked higher by the slenderest of margins yesterday, aided by the three-month high CBI UK retail sales print.
Sterling could potentially post further gains versus the risk-sensitive ‘Aussie’ this afternoon if a high US GDP figure boosts Federal Reserve rate expectations.
Pound to New Zealand Dollar (GBP/NZD) Rises 30 Pips
Despite trading at its highest level for over two years against the US Dollar, the New Zealand Dollar tumbled by around a third of a cent versus the Pound yesterday.
Having said that, GBP/NZD remains close to multi-month lows and could depreciate again over the coming weeks if Brexit anxieties and UK economic figures continue to weigh on demand for Sterling.