Pound Sentiment Remains Fragile
UK September retail sales dropped sharply, falling well below consensus forecasts, with stock levels too low again. Companies are expecting a better performance for October. The poor data release hampered the Pound and raised doubts that the Bank of England would keep the upbeat policy message over the next few months. Further evidence of supply issues and disruption to the economy from energy shortages also unsettled confidence. Sterling dipped back below 1.3700 to the dollar while the Euro secured a net recovery to 1.1670.
EUR is showing some weakness in the first hours of trading this morning on the back of the German election result.
Futures market data revealed a switch to bets against the Pound, in contrast to last week bets being for the Pound. This shows that hedge funds aren’t confident on the direction of Sterling.
Pound sentiment remains fragile this morning, but solid global risk conditions curbed potential selling pressure. Sterling opens around 1.3680 to the dollar and the Euro around 1.1670.