Pound remains stable

Currencies Direct October 24th 2014 - < 1 minute read

Sterling has remained within a tight trading range against the euro and USD, despite another week of disappointing data for the pound. On Tuesday we saw public sector net borrowing figures, which despite a higher GDP of three per cent in the first half of the year, were higher than the previous year. Overall, tax receipts were down, and a low growth in earnings was mainly responsible. This left the treasury slightly embarrassed and set to miss the OBR target for the year.
 
As for the Bank of England minutes, we saw a repeat of last month’s 7-2 vote in favour of maintaining interest rates at 0.5 per cent. The hawks in the group, Weale and McCafferty, highlighted the negative impact of keeping rates too low for too long, but the over-riding sentiment was concern for the Eurozone and the consequent risks to the UK. There is evidence that UK growth is losing momentum, particularly in manufacturing, which has been compounded by a stronger pound hurting exports.
 
Finally retail sales in the UK fell 0.3 per cent against an expected decrease of 0.1 per cent yesterday. The Office of National Statistics said clothing and footwear sales dropped by 7.8 per cent last month, the biggest fall since April 2012. This alongside slower wage growth and dipping house prices fuel further concerns over the UK economy.

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