Pound Sterling sees fleeting gains following upswing in UK retail sales
Philip McHugh May 25th 2018 - 2 minute read
The pound momentarily ticked higher on Thursday as markets welcomed the UK’s latest retail sales figures.
Sterling appears to be broadly flat this morning, with GBP/EUR holding steady at €1.1417, GBP/CAD muted at C$1.7242, while GBP/AUD and GBP/NZD are both stable at AU$1.7649 and NZ$1.9304 respectively. Only GBP/USD is currently showing any signs of movement, having dropped to $1.3353.
The US dollar looks poised to fall further later today if US durable goods orders are shown to have contracted in April, as is expected…
What’s been happening?
The pound found some much-needed relief on Thursday, with Sterling appreciating against the majority of its peers in the wake of the UK’s better-than-expected retail sales figures.
According to data published by the Office for National Statistics (ONS), UK retail sales growth surged from -1.1% to 1.6% in April.
This easily outpaced expectations of a more modest rebound to 0.7% and saw sales volumes expand at their fastest pace since October 2016.
However with the rebound being widely anticipated after the disruption caused by the ‘Beast of the East’ weather system in March, the pound struggled to maintain some of its gains.
The euro meanwhile was able to see off Sterling’s advances yesterday as it was buoyed by China’s vote of confidence in the single currency.
‘In comments made by China’s Premier, Li Keqiang at a joint press conference with German Chancellor Angela Merkel, Mr Li stated ‘the euro is an important choice in our foreign currency reserves’ and went on to say that China remained committed to being long-term and responsible investor in the euro.’
The gains in the GBP/USD exchange rate were initially reinforced on Thursday by the publication of the latest US housing data, which revealed existing house sales fell faster than expected in April.
However the pairing was met by volatility by the end on the session as US President, Donald Trump’s decision to cancel his summit with North Korea next month unsettled markets.
What’s coming up?
Looking ahead, the pound could stumble this morning with the release of the UK’s latest GDP estimate, with the data expected to confirm that UK economic growth slowed to just 0.1% in the first quarter of 2018.
Meanwhile a lull in notable economic data may limit movement in the euro in today’s session, especially if the focus returns to Italy and the fears the country’s debt could balloon further under the new government’s spending plans.
At the same time the recent rally in the US dollar may come to an abrupt halt this afternoon as economists forecast data will show US durable goods orders fell sharply in April.