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Weekly roundup: Pound plummets as dire retail sales reading alarms markets

currency-newsWeekly roundup: Pound plummets as dire retail sales reading alarms markets
The pound was mostly muted through the start of last week as a result of limited data and thin trading conditions due to the extended Easter weekend.

Sterling then began to tick lower as a result of fresh UK political uncertainty.

GBP investors raised fresh doubts over the future of Boris Johnson’s premiership as he was accused of misleading parliament over the ‘partygate’ scandal, after receiving a police fine for breaching lockdown rules the week before.

This was then followed by the news that Parliament could hold a formal inquiry into the matter, after an investigation was backed by MPs.

Further limiting demand for the Pound was the situation in Ukraine, as Russia’s new offensive in the east weighed on market sentiment.

However, the majority of the pressure Sterling faced last week came at the very end of the session with the release of the UK’s latest retail sales and PMI releases.

Sales growth in March plummeted from –0.5% to a three-month low of –1.4%. At the same time April’s preliminary manufacturing and services PMI both undershot expectations.

The lacklustre data gave rise to fresh concerns over the impact the UK’s cost-of-living crisis may be having on the economy, as well as weakening Bank of England (BoE) interest rate hike expectations.

Fresh UK political uncertainty sees the pound open this week on the back foot, with GBP investors unnerved by reports suggesting senior Conservatives may be plotting to oust the Prime Minister.

In the absence of any high-impact UK data Sterling may struggle to mount a recovery, particularly if BoE Governor Andrew Bailey strikes a dovish tone in a speech scheduled for later in the week.
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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