The Pound edged higher against the US Dollar and remains close to a multi-year high as disappointing retails sales data out of the USA softened the ‘Greenback’.
Against the Euro the US Dollar was trading higher and the Pound advanced to its highest level in 16-months after the single currency was weakened by data which showed that economic sentiment in the Eurozone and Germany fell sharply this month.
As the session progressed the ‘Greenback’ came under pressure after a report released by the Washington based Commerce Department showed that retail sales in the world’s largest economy increased by just 0.1% last month.
The tiny rise was in sharp contrast to the previous month’s sharp rise of 1.5% in March.
Economists had been expecting a rise to 0.4%.
Economists were blaming the weak figure on the fact that Easter was later than usual this year. Sales may have been depressed because of seasonal corrections connected to the Easter break.
Others said however that the data showed that US consumers remained cautious over the slow economic recovery.
“You really had a spectacular March. You are now having an April hangover … The reality of the economy is decent but not great. Some people over-extrapolated the March numbers,” said Guy Berger, an economist at RBS in Stamford, Connecticut.
Sterling is likely to advance further on Wednesday as economists forecast that the Bank of England will increase its growth forecasts in its inflation report.
Unemployment data is also expected to show that the UK’s jobless rate fell again, this time to 6.8%.
Average earnings are also expected to show improvement.
The main event for the US Dollar tomorrow will be the latest PPI data.
GBP to USD Update – 14/05/2014
On Wednesday the Pound shed some of its recent gains against the US Dollar as UK jobless claims and wage gain data disappointed expectations and the Bank of England restated its commitment to keeping interest rates at record lows for the foreseeable future.
Sterling strengthened modestly against the ‘Greenback’ yesterday after US advance retail sales figures showed a smaller-than-anticipated gain.
However, the Pound posted modest declines during the European session and moved away from a 16-month high against the Euro as investors digested the week’s big UK news.
The UK unemployment rate did fall to a five-year low of 6.8 per cent in the three months to March, but the number of applications for unemployment benefit didn’t drop by as much as expected in April.
Average weekly earnings also advanced by 1.7 per cent instead of the 2.1 per cent anticipated.
Meanwhile, the Bank of England left growth and inflation projections unchanged in its inflation report and intimated that borrowing costs wouldn’t be increased for some time to come.
The GBP/USD pairing shed 0.25 per cent after the report, hitting a low of 1.6754.
Today’s US MBA mortgage applications data is unlikely to have much of an impact on the GBP to USD pairing.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.5934,
US Dollar,,Canadian Dollar,1.0894,
US Dollar,,Euro,0.7290,
US Dollar,,Australian Dollar,1.0642,
US Dollar,,New Zealand Dollar,1.1558,
Canadian Dollar,,US Dollar ,0.9173,
Pound Sterling,,US Dollar,1.6778,
Euro,,US Dollar,1.3710,
Australian Dollar,,US Dollar,0.9398,
New Zealand Dollar,,US Dollar,0.8658,
[/table]
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