After a week full of significant UK releases including inflation, the Budget and the MPC Monthly minutes it was the turn of retail sales to make the headlines and for all the right reasons. A gloomier than expected 0.8% decline in sales was announced with consensus forecasts only expecting a 0.6% fall - which isn’t exactly an upbeat figure either. As this note has discussed on many occasions our high street is struggling and there appears to be no improvement on the horizon for our hard pressed retailers. Why is this case? Well, consumers are having their purchasing power eroded as more people are out of work and even those who are in work, are suffering with higher prices and lower wage increases meaning they have less money to spend – with this likely to be maintained for the foreseeable future. It may not sound like it, but I really am trying to remain positive.
Looking across to mainland Europe and they are not without their problems either. With the Portuguese Prime Minister resigning on Wednesday night after he failed to get parliament to pass further austerity measures, the likelihood that Portugal will follow Greece and Ireland and ask for a bailout seems almost inevitable. For now though the government is insisting it does not need support, but with 4.5 billion Euros of debt needing refinanced in April and interest at over 7.5% their attitude seems to be more patriotic than realistic. If Portugal were to fall to the same fate as Ireland and Greece this would move the focus on to Spain, the Euro zone fourth largest economy, with any potential bailout there putting significant strain on the EU’s support fund.
So with all this uncertainty in the euro zone you may have thought the euro would be weaker as investors take fright, but this has not been the case. In early morning trading GBP/EUR was trading down at 1.1358 from yesterday’s 1.1454 level, with the disappointment of the UK retail sales figures weighing on Sterling. The pound was also down against the dollar at 1.6070 - way off the early week highs of 1.6400.
There is a raft of data releases to watch out for today including the German business climate and expectation indices, which will show current business sentiment in the euro zones most important economy. In addition, the US announce GDP figures at 1230 GMT, which if higher than the 3% forecast, may be enough to further weaken the GBP/USD rate.
Posted in Daily Market News on May 30 2014
So Budget 2011 has been and gone, but what does it all mean? The Chancellor proclaimed his budget was going to put the ‘fuel in the tank of the UK economy ‘and in a literal sense the one pence reduction in fuel duty will help ease the burden when filling...
VIEW FULL ARTICLEPosted in Daily Market News on Mar 24 2011 by alex
Posted in Daily Market News on Mar 23 2011 by alex
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