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Worst September retail performance since 1995 weighs on pound

business-articlesWorst September retail performance since 1995 weighs on pound
  • UK retail sales slump weakens pound
  • US dollar benefits from global trade anxiety
  • Oil price recovery boosts Canadian dollar
 
 Pound to struggle in absence of Brexit breakthrough
 
Confidence in the outlook of the UK economy received a fresh blow as the latest British Retail Consortium (BRC) sales data saw its worst September on record.
 
As sales slumped -1.3% on the year this pointed towards the continued impact of Brexit-based uncertainty, with non-essentials seeing a particularly sharp decline.
 
With EU officials showing little enthusiasm for Boris Johnson’s Brexit proposal, concerns over the shape of the UK’s future relationship with the EU remain.
 
Unless there are signs of the two sides moving towards a compromise, or resolving the issue of the Irish border, support for the pound could prove limited.
 
 
Softening business sentiment set to weigh down US dollar
 
As markets braced for upcoming US-China trade talks the safe-haven US dollar benefitted from a risk-off environment.
 
Comments from Chinese officials raised concerns that an imminent agreement is unlikely.
 
USD exchange rates could come under pressure today, however, if the NFIB small business optimism index shows a deterioration on the month.
 
With confidence in the underlying health of the US economy already weakening, any decline here may drag the US dollar lower across the board.
 
 
Weak construction sector may drag on Canadian dollar
 
A recovery in oil prices helped to boost the Canadian dollar at the start of the week, driven by easing anxiety over the possibility of a fresh global oversupply glut.
 
However, this positive outlook could prove short-lived if anxiety over the global trade outlook continues to pick up.
 
Demand for the Canadian dollar may also ease in response to August’s building permits data, with forecasts pointing towards a sharp decline on the month.
 
Evidence of a weakening construction sector could put CAD exchange rates on the back foot, given existing worries over the resilience of the wider Canadian economy.
 
 
Upcoming Data:
 
Tuesday, 8th October 2019
11:00 USD NFIB Small Business Optimism Index
13:30 CAD Building Permits
 
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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