Buoyant UK retail sales boost sterling against dollar
Sterling rose against the dollar after a survey showed better-than-expected retail sales in October and bolstered chances of a sustained economic recovery in the UK. Hopes that the UK might be on the road to recovery were boosted by the latest snapshot of high street spending from the CBI (Confederation of British Industry) showing the strongest retail sales growth since the summer coupled with a belief among shops and stores that business in November would also be active.
However a separate report from GfK showed already fragile consumer confidence weakening by two points to -30 as the short-term fillip from the Olympics faded. “While the Olympics are thought to have boosted GDP in the last quarter, the late Summer boost in consumer sentiment has now faded. The government will be concerned that the economic bounce will follow a similar path and deflate during the Autumn.”
Today the eurozone finance ministers will hold a video conference with talks to be centered around the next aid disbursement for Greece, desperately in need to get an additional EUR 31.5 bln to meet its financial obligations. Recent reports suggest a deal should be days away after the Troika mission confirmed last week the next tranche of funds is expected to be unlocked, which adds to advanced discussions over a 2-year extension for Greece to meet the deficit target. Spain expects the European Commission to approve the banking reforms by Nov 15 and authorize the first installment of a program of up to €100 billion within 3 weeks, the spokesman said.
Major U.S. stock exchanges is expected to reopen today after Sandy. On the FX markets, Sterling rose against the US dollar following the better than expected retail sales figures with GBP/USD is trading at a range of 1.6069-1.6135. The euro also enjoyed gains during the day following a strong Italian bond auction and EUR/USD is testing the $1.30 level early this morning.
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