Record plunge in retail sales sidelines Sterling
Philip McHugh April 27th 2020 - 2 minute read
The release of some worrying retail sales figures left the pound mostly directionless at the end of last week’s session.
Sterling appears to have found some momentum at the start of this week however, with GBP/EUR climbing to €1.1468 and GBP/USD jumping to $1.2437. GBP/CAD has strengthened to C$1.7485, but GBP/AUD and GBP/NZD have dipped to AU$1.9258 and NZ$2.050 respectively.
Looking ahead, we’re set to get our clearest look yet into how the coronavirus crisis has impacted the global economy with the publication of US and Eurozone GDP figures later this week.
What’s been happening?
The pound stalled on Friday as the Office for National Statistics (ONS) reported UK retail sales plummeted to a record low for the month of March.
Also limiting the appeal of Sterling were comments from the EU’s chief Brexit negotiator Michel Barnier, who warned of ‘disappointing progress’ so far in post-Brexit trade talks.
The US dollar was also left struggling at the end of last week’s session after data showed US durable goods orders fell off a cliff last month, striking their lowest levels in over five years.
This weakness in USD exchange rates allowed the euro to tick higher on Friday in spite of German business morale reportedly sliding to an all-time low in April.
What’s coming up?
Turning to the week ahead, the spotlight will be on the latest GDP figures from the US and Eurozone.
Both releases are expected to reveal a sharp contraction in growth in their respective economies in the first quarter of 2020 as the coronavirus crisis brought economic activity to a screeching halt.
Also set to influence both the US dollar and the euro this week will be the Federal Reserve’s and European Central Bank’s (ECB) latest policy meetings.
No policy changes are expected from either central bank this week, but investors will be paying close attention to any hints that they may be planning to introduce additional stimulus measures further down the line.
Meanwhile, GBP investors will be hoping the UK government will be willing to start sharing its lockdown exit strategy this week, with the pound potentially facing some pressure if ministers remain reluctant to discuss their plans.