All categories


Pound firms on the back of upbeat retail sales figures

Philip McHugh February 21st 2022 - 2 minute read

The pound closed last week on a positive note, following the release of a stronger-than-expected UK retail sales print.

Sterling is trading in a wide range so far this morning, with GBP/EUR subdued at €1.1973 and GBP/USD climbing to $1.3625. GBP/CAD and GBP/NZD are holding steady at C$1.7350 and NZ$2.0279, respectively, while GBP/AUD retreats to AU$1.8882.

Looking ahead, will some positive UK PMI releases help to bolster GBP exchange rates this morning?

What’s been happening?

The pound maintained a positive trajectory at the end of last week, following the publication of the UK’s latest retail sales figures.

Data published by the Office for National Statistics (ONS) revealed sales growth rebounded by 1.9% In January, versus forecasts for a more modest 1% expansion.

However ongoing Brexit jitters ensured Sterling’s gains remained limited in scope.

The euro, meanwhile, was left to trade on the back foot on Friday as investors grew increasing nervous about the potential for war to break out in Eastern Europe.

This came amidst reports of an escalation of violence in Eastern Ukraine, which Western powers warned could be used by Russia as a pretext for invasion.

At the same time, the prevailing risk-off mood helped to bolster demand for the US dollar on Friday, with fears of an imminent Russia-Ukraine war sapping market sentiment.

However these gains were capped in the face of uncertainty over the Federal Reserve’s next rate hike, with USD investors less sure of a half-percentage increase in the wake of some dovish Fed minutes published earlier in the week.

What’s coming up?

Turning to this week, the focus at the start of the session looks to be on the publication of the latest PMI figures from both the UK and Eurozone.

The former may help to pound strengthen at the start of this week as analysts forecast activity in the UK’s private sector will have improved again this month.

Meanwhile, the euro could face an uphill battle if the Eurozone PMIs report economic growth in the bloc remained relatively subdued in February.

Meanwhile, the closure of US markets for President’s Day could result in thin trading conditions in the US dollar today, likely limiting movement in USD exchange rates.

Written by
Philip McHugh

Select a topic: