The pound edged away from a multi-year high at the end of last week as investors engaged in some profit taking.
Sterling continues to trade narrowly this morning, with GBP/EUR muted at €1.1684, GBP/USD flat at $1.2877, and GBP/CAD flat at C$1.7044. GBP/AUD and GBP/NZD are holding steady at AU$1.8951 and NZ$2.0147 respectively.
Top of the docket today will be the publication of the latest US retail sales figures. Will the US dollar rally if sales growth rebounded?
What’s been happening?
The pound was left directionless yesterday following the latest UK retail sales figures.
The Office for National Statistics reported sales growth shrank by 0.1% in October, missing expectations of a 0.2% expansion.
Robust retail sales underpinned UK economic growth through the summer, so news that sales growth slumped at the start of the fourth quarter naturally had a negative impact on Sterling.
The euro also traded in a narrow range on Thursday, with relief that Germany avoided a recession quickly fading as Germany’s finance minister played down the chances of the country launching any fiscal stimulus.
Meanwhile, the US dollar fell across the board yesterday evening, coming under fire during a quieter session as US treasury yields weakened.
Also weighing on USD exchange rates were some positive headlines regarding US-China trade talks, which limited demand for the safe-haven ‘greenback’.
What’s coming up?
The US dollar is likely to be centre stage today as the US publishes its own retail sales report.
This is expected to show that sales growth rallied from -0.3% to 0.2% last month.
Strong consumer spending has been a key pillar of US economic growth so far this year, so a rebound should help strengthen USD exchange rates.
In the absence of any notable economic data the focus for GBP investors today will be on UK politics, where ongoing election uncertainty may limit the appeal of the pound.
As for the euro, the single currency may struggle to draw support this morning as the Eurozone’s publishes its final CPI report, which is likely to confirm inflation in the bloc slowed to a near three-year low in October.
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)