Cross-party talks resume
Last Thursday’s headline UK retail sales increased 1.1% for March, beating forecasts of a monthly decline and February’s figures were revised upward too. Annual retail sales growth hit 6.7%; the strongest since October 2016, although last year’s results were lower due to adverse weather and the Pound saw a fleeting lift from the results.
Sterling failed to make headway and dipped below 1.3000 against the Dollar while the Euro was resilient near 1.1560. CFTC data recorded a shift to a net long position in speculative contracts (bets on Sterling rising) for the first time in 10 months. This indicates limited potential for fresh Sterling buying unless there are significant positive developments.
Yesterday, oil prices gained but Sterling traded sideways. Politics will be important in the week ahead with parliament returning from recess and Theresa May facing to set a resignation date. The UK data calendar is empty today but the government will resume Brexit talks with Labour.
Headline US retail sales increased 1.6% for March, well above consensus estimates of 0.9% and underlying sales increased 0.9% on the month which boosted confidence in the first-quarter GDP estimate.
The PMI manufacturing index remained at 52.4 according to April’s flash reading, but the services-sector reading declined sharply to 52.9 from 55.3, well below consensus forecasts and a 31-month low. Overall business confidence also dipped to the lowest level since June 2016 which dampened sentiment towards the outlook.
The dollar was still able to resist significant selling as commodity currencies lost ground and the Euro settled just below 1.1250
Thursday was a tough trading day for the Euro, with many thinking that the Euro-zone was on the verge of a recovery. The data, however, had other ideas and swiftly curbed optimism. In particular, German data was the biggest cause of disappointment, recording only a very slight recovery from 6-year lows. Euro-zone growth also slowed, but PMI data improved slightly. The market had expected a bigger improvement for April however and the Euro slid to below 1.1250 versus the Dollar.
Data wise, due to the two bank holidays in the UK this weekend (Friday and Monday), there has been little of interest and little that will affect the market today. Euro consumer confidence for April is the only piece of data due and this is expected to have very little influence on volatility. This week will be pretty quiet in general in terms of data.
Data To Watch
2pm USD Housing Price Index (MoM) (Feb)
3pm USD New Home Sales (MoM) (Mar)