The pound tumbled yesterday after the Bank of England (BoE) forecast a UK recession beginning in the fourth quarter of this year.
Left to its own devices the pound starts today mostly on the decline. GBP/EUR is just below opening levels at €1.1276, although GBP/USD has inched up 0.1% to US$1.3387. GBP/AUD has fallen -0.3% to AU$1.7255, as has GBP/NZD, which is down to NZ$1.8970. GBP/CAD has slipped -0.1% to C$1.6949.
Read on to see why Boxing Day high street footfall figures could upset the pound this morning…
What’s been happening?
The pound managed to inch higher versus the euro and US dollar yesterday, although the Boxing Day data calendar was unsurprisingly lacking all round.
The only data available came from the US, with the Richmond Fed manufacturing index for December falling further-than-forecast from 30 points to 20 and the Dallas Fed manufacturing index rising above projections from 19.4 to 29.7.
What’s coming up?
With things still creeping along in a Christmas haze, the supply of new economic data remains thin today, giving more weight to what few releases are set for publication.
The UK’s only fresh ecostat is this morning’s British Bankers’ Association (BBA) mortgage approvals data for November, which is expected to show a slight drop on the previous month.
With the outlook on the economy still uncertain, as consumer confidence wavers in the face of rising inflation and the potential for interest rates to increase, a weakening number of mortgage approvals could add to fears that consumers are becoming more reluctant to make large purchases.
High street shopping figures for yesterday’s sales are likely to add to this air of uncertainty, after footfall was shown to be down -4.5% on the previous year.
While this is partly due to a change in behaviours, as consumers stay at home and buy online instead of heading out to the shops, the fall in footfall is bigger than retail analysts had expected.
Meanwhile, the euro has little other than Spanish retail sales data for November - which has already been released - to influence it from a data point of view. As sales showed a larger-than-expected growth rate of 2% - versus forecasts of 0.6% - EUR could receive some support throughout the session.
Things are more exciting in the US, with today's headline figure being the consumer confidence index for December. A slight weakening is forecast, which doesn't bode well for the biggest time of year in terms of retail and consumer spending.
Also on the calendar will be the Conference Board present situation and expectations indices for December and pending home sales figures for November.
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)