Pound Sterling Steady Following UK Retail Sales Report
Data yesterday showed better-than-anticipated (but still fairly subdued) UK retail growth in July.
The Office for National Statistics reported that sales volumes increased 0.3% month-on-month, which beat estimates of 0.2%. However, the number failed to give Sterling a massive lift because June’s figure was significantly revised from 0.6% to 0.3%.
On a yearly basis, the retail sector saw growth of just 1.5%, down from 2.8% previously. Investor’s spirits were mildly cheered by the results as they came during a time of increased pressure on consumer spending.
Negative real wage growth would be expected to weigh on retail spending, so all things considered it was a moderately encouraging report.
Pound to Euro Exchange Rate Rises Following Dovish ECB Minutes
The Pound to Euro exchange rate rallied by around a third of a cent yesterday afternoon following dovish comments from the European Central Bank.
The ECB’s latest minutes report signalled that policymakers were concerned that the Euro’s recent appreciation could threaten the bank’s efforts to drive inflation back towards the 2.0% target.
At 1.3% there is still a long way to go for Eurozone CPI, even though growth and labour market indicators have shown sturdy improvements following the ECB’s decision to embark on an expansive asset purchasing scheme.
The minutes’ dovish message instantly impacted demand for the single currency, and could lead to additional losses if central bank officials proceed to focus on the Euro’s nascent strength.
Pound to US Dollar Exchange Rate Flat as Trump Concerns Grow
‘Cable’ fluctuated throughout the day yesterday but the pair did not witness any lasting shifts in sentiment.
The slight uptick in UK retail sales was not enough to boost the Pound versus the US Dollar, while demand for the ‘Greenback’ was compromised by a surprise -0.1% contraction in manufacturing production, which contributed to a lower-than-expected 0.2% rise in the wider industrial sector.
Following President Donald Trump’s unconvincing response to the violence of last week’s Charlottesville protests, many CEOs resigned from the President’s manufacturing council, sparking concerns that Trump’s controversies may have derailed the Republican pro-business agenda.
Indeed, Trump’s chief economic adviser Gary Cohn is seen to be the last remaining connection between the Trump administration and the pro-investment world.
Dark mutterings suggest Cohn is considering quitting to protect his reputation, following Trump’s troubling remarks that appeared to equate left-wing, anti-fascist protestors with right-wing neo-Nazi groups and white supremacists. If Cohn were to jump ship, it could spark unrest in US markets and soften demand for the US Dollar.
Pound to Canadian Dollar Exchange Up Ahead of Canadian CPI Report
Despite a slight uptick in crude oil prices, the Pound managed to register gains of around 30 pips versus the commodity-correlated Canadian Dollar yesterday.
Oil received a little bit of a boost following news that Saudi Arabia’s crude exports sunk to a 33-month low in June. The commodity was also supported by a recent report showing that US crude stocks slumped to an 11-month low last week.
Data this afternoon is tipped to show that Canadian inflation increased from 1.0% to 1.2% in July, which could send GBP/CAD lower.
Pound to Australian Dollar Exchange Rate Rallies on Rise in Part-time Australian Jobs
The Pound to Australian Dollar exchange rate drifted higher by around a third of a cent yesterday despite a report indicating that unemployment tumbled from 5.7% to 5.6% in July.
Investors appeared to sell the ‘Aussie’ due to the fact that the decrease in joblessness was largely influenced by a jump in part-time work. While full-time positions declined -20,300, the number of part-time jobs rose 48,200.
Pound to New Zealand Dollar Exchange Rate Struggles for Direction
The Pound to New Zealand Dollar exchange rate struggled for direction yesterday as UK retail sales data came in at 0.3%, which was not deemed strong enough to drive Sterling higher, nor weak enough to bring about another leg lower in GBP/NZD.
Data Released Today
13:30 CAD Consumer Price Index (YoY) (JUL)
15:00 USD U. of Michigan Confidence (AUG P)