The Pound (GBP) weakened across the board on Thursday and declined to a fresh four and a half month low against the US Dollar (USD) as disappointing retail sales data weighed upon the currency.
According to official data published by the London based Office for National Statistics, retail sales rose by just 0.1% in July.
The figure disappointed economists who had expecting a rise of 0.4% and raised concerns over the outlook for the UK economy.
Sterling made gains on Wednesday after policy meeting minutes released by the Bank of England hinted that policy makers are edging closer to raising interest rates.
Two out of nine of the Bank’s Monetary Policy Committee voted in favour of rises and spurred traders to once again raise their bets for an interest rate rise occurring before the end of 2014.
Today’s retail sales data however added to Monday’s disappointing inflation data and put that a rate rise in doubt as a slowing UK economy will ease pressure upon the Central Bank to raise rates.
The report marks a third straight month in which retails sales growth has failed to match economist expectations.
‘Retailers will the slowdown in sales is a temporary blip rather than a prolonged decline in consumer confidence. Food sales continue to struggle. Grocery retailers are in the midst of a price war with everyday low prices being the main strategy for both mainstream and discount operators. While this approach has benefited consumers, the reduction in the value of goods sold will continue to have a detrimental impact on total retail sales during the forthcoming months. England’s early exit from the World cup also deprived the grocery sector of a much needed fillip,” said Keith Richardson from Lloyds Bank.
Year on year retail sales also rose less than expected.
On an annual basis sales increased by 2.6%, down from Julys revised figure of 3.4% and below economist expectations for a 3% rise.
Further losses for the Pound were restrained somewhat by a separate report which showed that the UK’s car industry was continuing to boom.
More than 130,000 cars were made in the UK last month, a surge of 2.8%.
Cars made for export rose 2.9% last month, taking the total number exported since 2010 past the 5 million mark.
SMMT chief executive Mike Hawes said passing the five million, mark was “a major milestone and testament to the burgeoning reputation of UK automotive excellence and demand for British-made cars.”
With no market, moving domestic data due for release on Friday the Pound is likely to remain under pressure against its major peers.
Positive manufacturing PMI data on Thursday afternoon will likely see further losses for the GBP/USD exchange rate.
Pound Sterling (GBP) Exchange Rate Continues to Fall: Lack of Domestic Data Adds Pressure
The Pound has continued to soften over night after the unimpressive retail sales data from yesterday weighs heavily on the currency.
With nothing by way of domestic data releases today the Pound is likely to continue to trend downwards. If the US Dollar continues to soar it is likely that the Pound will suffer yet more losses.
Expect the Pound to be dictated, in terms of strength, by the movement of other currencies today. However, a gain is increasingly unlikely given that only Canada has any domestic data releases for the majority of the day.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6579 ,
Pound Sterling,,Euro,1.2494 ,
Pound Sterling,,Australian Dollar,1.7879 ,
Pound Sterling,,New Zealand Dollar,1.9792 ,
US Dollar,,Pound Sterling,0.6030 ,
Euro,, Pound Sterling ,0.8000 ,
Australian Dollar,, Pound Sterling ,0.5591 ,
New Zealand Dollar,,Pound Sterling,0.5048 ,
[/table]
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