Thursday saw the Pound shed its value against every major currency when news arose that Britain’s retail sales figures were revised down further than analysts had originally predicted.
Investors began to sell the Pound at 09:30 when the retail sales figures were released showing a large decline from Januarys robust figure of 1.9% to the pitiful figure of -0.8%, 0.2% lower than forecast. Clearly this hasn’t gone down well for the UK economy which is already suffering from exceedingly high inflation and poor growth figures.
The Bank of England minutes had already done the damage to the Pound when they were delivered by the Monetary Policy Committee on Wednesday morning. Six out of nine members remained certain that inflation would fall back to an acceptable level as well as the chancellor who also downgraded his forecast for the UK’s growth for 2011 and 2012.
Soon after the minutes, we saw well over a cent fall against the US dollar which ended Wednesday’s trading around 1.6250. Now the Pound is only just managing to hold onto 1.61 after losing upwards of 1.5 cents on Thursday.
The Euro is still trading well against the US Dollar despite the credit downgrade from Portugal yesterday afternoon. Fitch ratings slashed Portugal’s sovereign rating by two notches with warnings that is could be further downgraded after parliament had voted down the government’s economic policy.
Sterling lost the most ground against the Australian and New Zealand Dollars yesterday. The Pound was down 1.5% and 2% respectively by the end of London’s trading. Better than expected fourth quarter GDP figures for New Zealand spurred investors to take long positions on the Dollar which in turn has helped is gain more ground against the UK’s currency.
Today’s economic data is based solely around the Euro zone and the US economy. Starting early the revised Q4 GDP figures for France will be released at 06:30 GMT which are forecast no change over the previous estimate of 0.3%, which is then followed by March’s Consumer Confidence data at 07:45.
Germany has import prices for February out at 07:00 GMT and the IFO Business Climate for March at 09:00. Positive figures from these could add further pressure on the flailing Pound.
Moving onto the US, 12:30 holds the release of the Final GDP figures for the fourth quarter which are forecasted a 0.2% rise to 3.0% growth, followed by the Michigan Sentiment later this afternoon.
I’d expect the US Dollar to remain steady today; the Pound is once again down against the majors and 0.3% down against the US currency in particular. Interbank rates at the moment are GBPUSD 1.6070 and GBPEUR 1.1345.
The Australasian currencies are still putting a fair bit of pressure on the Pound. The New Zealand Dollar in particular has gained over 6 cents in the past 48 hours against Sterling and the Australian Dollar is trading just above 1.57.
