GBP could extend losses if retail sales disappoint

Philip McHugh August 22nd 2019 - < 1 minute read

  • Pound stumbles as UK public finances fall short 
  • Lull in Italian political crisis benefits euro
  • Canadian dollar pushes higher after steady inflation data 

Pound vulnerable to retail sales slowdown
Demand for the pound diminished after July’s UK public sector net borrowing figure missed forecasts with a narrowed budget surplus. 
GBP exchange rates could extend losses today if the CBI reported retail sales index shows a fresh decline.
Another negative reading from the index may drive a fresh round of pound selling, with lower levels of consumer spending likely to limit economic growth.
Dovish ECB minutes likely to dent euro
A temporary lull in Italian political anxiety helped the euro recover its footing yesterday, although the risk of a general election remains.
EUR rates could dip today if the European Central Bank’s (ECB) July meeting minutes prove dovish.
Fresh evidence that the central bank will enact monetary loosening at its next meeting would leave the euro vulnerable to selling pressure.
Steady inflation supports neutral Bank of Canada outlook
The mood towards the Canadian dollar remained positive as July’s consumer price index unexpectedly held steady.
As inflation remained at the Bank of Canada’s (BOC) 2% target markets see little risk of policymakers adopting an easing bias in the near future.
However, CAD exchange rates could stumble this afternoon if June’s wholesale trade sales data shows a contraction on the month.
Signs of weakening economic activity may drag the Canadian dollar down, especially if market risk appetite falters.
Upcoming Data:
Thursday, 22nd August 2019
11:00 GBP CBI Reported Retail Sales Index
12:30 EUR European Central Bank Meeting Minutes
13:30 CAD Wholesale Trade Sales


Written by
Philip McHugh

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