The GBP USD exchange rate tumbled this morning following an unexpected decline in UK retail sales at the end of 2016.
Surprise Drop in Retail Sales Drags on Pound US Dollar (GBP USD)
The Pound US Dollar (GBP USD) exchange rate fell by around half a cent on Friday morning as UK Retail Sales disappointed over the holiday period.
The Office for National Statistics (ONS) reported that sales dropped from 5.7% to 4.3% in December after analysts predicted that increased holiday spending would see sales rise to 7.2%.
The data appears to contrast with the tone of most retailers’ reports last week, with the majority of high street stores reporting that business improved in the approach to Christmas.
More worrying for investors is that sales are expected to plunge in 2017 as consumer spending is curbed by an accelerated inflation rate and expected price hikes at the start of the year as retailers negotiated with suppliers for the first times since the ‘Brexit’ vote and the fall in the Pound.
Volatility in US Dollar as US Prepares for Trump’s Inauguration
The US Dollar is facing increased volatility ahead of the inauguration of the 45th President of the United States.
Following one of the most divisive elections in US history, Donald Trump will be officially sworn into office later today to begin his first term of presidency.
While the change of government always leads to some volatility in the currency market, the uncertainty surrounding Trump’s economic policies and his outlandish promises made on Twitter has caused investors to remain dovish towards the ‘Greenback’.
GBP USD Exchange Rate Forecast: Supreme Court Judgement Ahead
The GBP USD exchange rate may fall early next week if the UK Supreme Court rules in favour of the British government, allowing it to trigger Article 50 without a vote in parliament and pursue its plans for a ‘hard Brexit’ unabated.
Meanwhile movement in the US Dollar will be largely dictated by Trump’s first moves in office next week. Should the new administration lay out a detailed stimulus report to support Trump’s ambitious infrastructure plan then the ‘Greenback’ is likely to rise as it did after his election.
However, should Trump fail to clearly outline his policies then USD is likely to falter.
Current Interbank Exchange Rates
At the time of writing the GBP USD exchange rate was trending around 1.22 and the USD GBP exchange rate was trending around 0.81.
Comments are closed.