Sterling slid against its rivals yesterday following the release of less-than-impressive UK employment data, and after a brief rebound the Pound has fallen once more.
The Pound Sterling Exchange Rate was in the region of 1.666 against the Euro as of 11:25 am GMT
After an ECB official made pessimistic remarks concerning the Eurozone’s economy recovery the Euro softened, and the Pound was able to recoup losses recorded against the Euro during local trade – which saw the British currency tumble to the more than one-month low of 86.37.
However, as the European session began this morning the Pound was trading lower against its peers ahead of the release of UK retail sales data.
The retail sales report, compiled by the Office for National Statistics, showed that sales (including fuel) slumped by 0.7 in March.
This result follows a gain of 2.1 per cent the previous month.
Although economists anticipated contraction, the median estimate was for a decline of 0.6 per cent.
The poor weather was once again attributed for the disappointing result, as shoppers’ enthusiasm dimmed in the face of relentless rain and one of the coldest March’s on record.
Retail sales excluding fuel slid by 0.8 per cent month-on-month, but were 0.4 per cent higher than in the same period of 2012.
After the figures were published the Pound posted modest declines against rivals including the US Dollar and Euro.
Although it appears that the UK may have just about sidestepped entering a triple-dip recession, data like that seen today and yesterday reminds investors that a return to reasonable levels of growth is still a long way off.
‘The weak data this week suggests it’s likely the Bank of England will add more stimulus to the economy. Although a lot of bad news has been priced in, we think the Pound will probably remain under pressure, especially against the Dollar, given its fundamentals.’
In Bank of England’s most recent policy meeting the MPC voted 3:6 in favour of increasing stimulus. BOE Governor Mervyn King was one of the three pushing for an increase in bond purchases.
The two-day meeting of the Group of 20 Finance Ministers and central bank heads is likely to trigger market volatility, although investors will also be focusing on political developments in Italy and this afternoon’s US initial jobless claims figures.
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