Pound (GBP) Falls as Figures Reveal Disappointing December for UK Retailers
Sales grew just 0.1% year-on-year (YoY) in December, according to figures released by the British Retail Consortium (BRC). Despite the usually lucrative Christmas period, sales posted the weakest rate of growth for five quarters, while spending for Q4 2015 increased 0.9% compared to the same period the previous year, only 1.0% higher than the previous month.
Concerns over the UK’s performance in the final quarter of 2015 have deepened following the release of UK manufacturing and industrial production statistics, both of which have fared worse than expected. Manufacturing continued in its decline, falling -1.2% instead of the forecast -0.8%, while Industrial Production slumped from 1.7% to 0.9%.
Yesterday…
Pound Sterling (GBP) Softens on Citigroup ‘Brexit’ Warning
Willem Buiter, Chief Economist for Citigroup, reckons there is a 35% chance that Britain will vote to leave the EU when the referendum takes place. The vote could be held as early as summer this year, despite originally being scheduled for 2017. Mr Buiter claims that a ‘Brexit’ would be a ‘disaster’ for the UK, with the remaining EU members likely to impose tough exit terms in order to discourage other countries from trying to leave the Union as well.
GBP/USD is still trading in positive territory, although gains have softened to 0.1%.
US Labour Market Conditions Post Unexpected Rise
The US Labour Market Conditions Index has posted a dramatic result after rising 0.2 points on last month’s 2.7 result, rather than dropping to just 0.4 as experts had forecast. Despite the US Dollar-positive news, the GBP/USD exchange rate is still trending positively, although gains appear to be softening.
Earlier…
Indicators show that UK businesses ended 2015 on a positive note, while concerns over China, oil and the housing market have weighed on the US Dollar today, allowing the GBP/USD exchange rate to extend a strong lead.
Pound Sterling to US Dollar (GBP/USD) Currency Pair Buoyed by Positive PMIs for UK Economy
Purchasing Manager’s Indexes (PMI) from Lloyds Bank have suggested a largely positive end to 2015 in terms of UK business growth. Unsurprisingly, London led the way, with the capital’s PMI scoring 56.9, 6.9 points above the neutral 50 mark which shows growth, while data from the Office for National Statistics (ONS) revealed that output per person in London rose 5.3% in 2014. The UK’s worst performing region was Scotland, which scored 50.3 on its PMI for business growth. Overall the average PMI for the UK, calculated from over 1,200 respondents, fell only slightly from 55.7 to 55.3. Economists are currently predicting that growth has accelerated during Q4 2015, anticipating a small rise from 0.4% the previous quarter.
A study by consultancy firm Oxford Economics has suggested that London will outpace New York in terms of business growth until 2030, with average growth of 2.9% compared to New York’s 2.6% increase. ‘A global outlook gives an unrivalled opportunity for enjoying growth from wherever it comes,’ said Richard Holt, Oxford Economics’ head of global cities research, adding that London was one of the ‘most flexible cities’ in the world.
The capital could be in for a jobs boom, with survey results from Manpower suggesting a net 9% of London firms intend to hire more staff in Q1 2016, which is 2% higher than the national average.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trading in the region of 1.4569.
US Dollar to Pound Sterling (USD/GBP) Exchange Rate Forecast: ‘Buck’ Softens Following Week-Long Appreciation
During the past week the US Dollar was able to advance against Pound Sterling, rising from 0.6760 at the beginning of the week to 0.6886 by the close of the week. USD/GBP has started this week trending down as traders take profit on a strong US Dollar and concerns over the Chinese economy continue to weigh heavily on global markets.
A persistent slowdown in China could halt Federal Reserve plans to increase the US benchmark interest rate further, while commodity prices continue to suffer as a result of China’s manufacturing slowdown. Tensions in the Middle East have further added to the slump in global oil prices, with US oil trains feeling the pinch. Oil car rental prices are down as much as -30%, with many sitting abandoned as a contraction in US shale oil production has made it more expensive in many cases for companies to buy US oil delivered by train than to pay for ocean-imported oil produced abroad.
The US Dollar is also feeling the drag factor from increasing concerns about the state of the domestic housing market, with one analyst claiming that housing prices are between 25% and 60% higher than what can be justified by the US economy.
The US Dollar to Pound Sterling (USD/GBP) exchange rate is currently trending down -0.4% between 0.6860 and 0.6890.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: US Data in Focus
A lack of UK data today means that minor US releases will have dominance. As well as indicators of change in the labour market, ‘Cable’ could be moved by speeches from two members of the US Federal Reserve: Dennis Lockhart, who supports future rate hikes and Robert Kaplan, who was cautious about raising interest rates ahead of the December meeting.
The GBP/USD exchange rate is currently trending between 1.4510 and 1.4583.
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