Pound US Dollar Exchange Rate Firms on Positive UK Retail Data

Pound Buoyed by Upbeat Retail Index

The Pound ticked higher during yesterday’s European trading session following reports of a sharp improvement in UK retail activity this month.

The Confederation of British Industry (CBI) latest distributive trade index surged from –45 to 20 this month as retailers reported their sharpest upturn in sales volumes since 2018.

Looking ahead, with GBP data releases thin on the ground today, the focus could shift to the upcoming Scottish elections, amidst concerns that the Scottish National Party could push for another independence referendum if it secures a majority next week.

Without any significant drivers this morning, the Pound US Dollar exchange rate has slipped below $1.39 again and GBP/EUR is holding in a narrow range.

Euro Flat in Absence of Data

The Euro was mostly rangebound on Tuesday, as the absence of any major Eurozone economic releases left the single currency a little directionless.

However, helping to prevent any slide in the Euro was some optimism around the EU’s vaccine rollout, which continues to gather speed, with the production of new vaccines in the EU reportedly doubling each month.

Turning to today’s session, we could see the Euro stumble further after Germany’s latest consumer confidence figures printed below expectations.

US Dollar Muted ahead of Fed Decision

The US Dollar traded in a narrow range through yesterday’s trading session, with the ‘Greenback’ failing to gain ground in spite of rising US Treasury yields.

This came as USD investors are convinced that the Federal Reserve will strike a dovish tone following its latest rate decision later this evening.

Economists predict that the Fed’s forward guidance will point towards the bank keeping interest rates on hold for longer, any confirmation of which could send the US Dollar sharply lower.

Canadian Dollar Weakens Despite Rising Oil Prices

The Canadian Dollar edged lower on Tuesday as a modest increase in oil prices failed to feed through into the commodity-sensitive ‘Loonie’.

Coming up, the publication of Canada’s latest retail sales figures could provide a leg up for the ‘Loonie’ later this afternoon, amidst expectations for a sharp rebound in sales growth in February.

Australian Dollar Stumbles as Inflation Disappoints

The Australian Dollar trended lower overnight on Tuesday as AUD investors were dismayed to see Australia’s consumer price index print below expectations in the first quarter, with inflation rising to 1.1% against forecasts it would accelerate to 1.4%.

New Zealand Dollar Fluctuates in Cautious Trade

The New Zealand Dollar traded in a wide range overnight, with the ‘Kiwi’ struggling to find some solid ground as investors remained bearish ahead of this evening’s Fed decision.

Data Releases

07:00 EUR German Consumer Confidence (May)

13:30 CAD Retail Sales (Feb)

19:00 USD Fed Rate Decision

23:45 NZD Balance of Trade (Mar)

Matthew Andrews

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