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GBP poised to fall following any dip in retail sales. Uptick in confidence may bolster USD

business-articlesGBP poised to fall following any dip in retail sales. Uptick in confidence may bolster USD
  • Slide in retail sales likely to dent GBP
  • US consumer confidence expected to rise
  • Fed Quarles to speak in Washington
GBP likely to slide on retail sales figures

The pound is likely to find itself forced to retreat later this morning as the Office for National Statistics (ONS) publishes the UK’s latest retail sales figures.

Economists forecast that sales growth will have slumped from 1.1% to -0.6% in December as sales slowed after an unexpectedly strong November.

This is likely to reflect a shift in UK shopping habits, as retailers brought their sales forward to November as part of the push for Black Friday.

Also possibly dragging on sales growth last month will have been the recent uptick in oil prices, with drivers possibly avoiding the pumps as Brent crude neared $70 a barrel.

However, should sales surprise for a second month running and come in above target then Sterling may be able to cling onto its recent gains.

US consumer confidence forecast to rise

The US dollar may break a run of weekly losses today as the latest consumer confidence statistics are released.

Analysts predict that January’s preliminary Michigan Consumer Sentiment reading will see the index climb from 95.9 to 97, suggesting that US households entered 2018 a little more optimistic.

While this would leave sentiment below the decade high of 100.7 struck in October, it would also be well above the long-term average of 86.2.

Analysts suggest that confidence will be bolstered by high employment and economic activity in December, but that ongoing concerns over low inflation will continue to drag on sentiment.

Nevertheless, the index could still fall below expectations if the possibility of a government shutdown this month unsettles Americans, with such an outcome likely to weigh on USD.

USD investors to watch Quarles speech for Fed hints

After a series of speeches by Federal Reserve policymakers unsettled the US dollar on Wednesday, markets will today be paying close attention to a speech by Randal Quarles.

Quarles – who is expected to join the Fed’s board of governors in the coming weeks – will speak before the American Bar Association’s annual banking law committee meeting this evening, and investors will be hoping he drops some hints on how the Fed’s monetary policy will look in 2018.

There appears to be some level of disagreement at the top of the Fed over how rate hikes should be handled this year, so any indication that Quarles sides with the more hawkish faction in supporting three rate hikes this year is likely to to be welcomed by USD investors.

Upcoming Data

Friday 19 January, 2018
09:30                     GBP Retail Sales  
15:00                     USD Consumer Confidence
18:30                     USD Quarles Speech
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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