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Surprise rise in UK inflation lifts pound

business-articlesSurprise rise in UK inflation lifts pound
  • Stronger UK inflation boosts pound
  • US dollar falters as odds of Federal Reserve action grow
  • Disappointing oil figures weigh on Canadian dollar
 
Pound braces for UK retail sales data
 
The pound trended higher across the board in the wake of yesterday’s UK consumer price index data, which saw the inflation rate strengthen from 2.0% to 2.1%.
 
With inflation failing to ease as forecast the odds of a 2019 Bank of England (BoE) interest rate cut decreased, boosting GBP exchange rates.
 
However, the mood towards the pound could sour this morning with the release of July’s UK retail sales report.
 
GBP exchange rates may return to a weaker footing unless consumer spending proves resilient in the face of ongoing Brexit-based uncertainty.
 
 
Weaker retail sales set to dent US dollar
 
USD exchange rates struggled to find any particular momentum as the Federal Reserve came under increasing pressure to cut interest rates again before the end of the year.
 
This afternoon’s advance retail sales data may add to the case for looser monetary policy if spending slows on the month.
 
Signs that US consumers are less optimistic would leave the US dollar on the back foot.
 
Even though the Trump administration delayed the imposition of an additional tariff on Chinese produce worries over trade could still drag on retail sales in the near future.
 
 
Will home sales rally boost the Canadian dollar?  
 
The Canadian dollar came under renewed pressure after US crude oil inventories failed to fall, with market risk appetite generally deteriorating.
 
CAD exchange rates could find a rallying point, however, if July’s existing home sales figure strengthens as forecast.
 
Investors expect to see sales pick up 1.5% on the month, reversing the previous month’s -0.2% contraction and signalling renewed resilience within the housing market.
 
If home sales fall once again though the Canadian dollar could be exposed to selling pressure.
 
 
Upcoming Data:
 
Thursday, 15th August 2019
09:30 GBP Retail Sales
13:30 USD Advance Retail Sales
14:00 CAD Existing Home Sales
 
 
 
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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