Strong Retail Forecast for the UK
Yesterday was a fairly quiet day in trading for the GBP versus the EUR and the USD. Both currency pairs were range bound for the course of the day with only minor data releases to provide any further direction to the underlying sentiment that has had a more significant impact on their movement.
The Confederation of British Industry released their retail sales balance yesterday which showed a large increase in the figure, which tracks a survey of short-term trends in the UK retail and wholesale distribution sector. It would appear that the increased proportionate spending power of households due to low inflation have provided a boost in the outlook for retailers for next month’s spending expectations. This information, coupled with some early sunshine for the year, looks set to provide brighter times for the high street but I am sure Bank of England chief, Mark Carney, will be mindful that we are heavily reliant on retail spending to produce good figures of late.
A combination of problems pervading the Eurozone and an outlook for an increased interest rate in the relatively near term have depressed equity levels and given the Dollar some tailwinds. The strong possibility of a missed repayment from Greece and the lessons from the crisis appears to be spilling into neighbouring nations, for example, Spain with bond yields rising after the regional and municipal elections and Spanish equities fell as well. Before examining the US equities market as the obvious alternative, of course, it is pertinent to note that the potential rate rise has already begun to affect US debt yields and the dollar picked up speed on the back of this.
Looking towards today’s economic releases, we see that the US Mortgage Applications is due followed by the Canadian Interest Rate Decision and the Bank of Canada rate statement. A G7 meeting is to take place today so we will await the result of this for tomorrow’s update.