CURRENCY NEWS-FLASH : GBP EUR and GBP USD Rates Gain on UK Retail Sales Figures

21 Apr 2011 at 10 AM - Written by John Cameron

STORY LINK CURRENCY NEWS-FLASH : GBP EUR and GBP USD Rates Gain on UK Retail Sales Figures

The Pound Euro exchange rate (GBP/EUR) is 1.1314. The Pound Dollar exchange rate (GBP/USD) is 1.6559.

The Pound gained some much-needed support in early trading today as UK Retail Sales figures for March showed an unexpected gain of 0.2%. Analysts had expected the numbers to show that UK shop sales shrank by 0.4% last month, following February’s sharp contraction of 0.9%.

The numbers provide a sharp contrast with the picture that the Bank of England painted of the current UK economic situation. The minutes stated that UK economic data in the month preceding April’s MPC meeting had “probably been to the downside”, leaving analysts in little doubt that UK interest rate hike was a long way off. Today’s numbers may cause investors to upwardly revise their expectations for UK interest rates over the next 12 months.

The GBP USD exchange rate stood at 1.6492 at the time of the release, but rose to touch 1.6563 in the 45 minutes following the release of the Retail Sales numbers. Sterling enjoyed similar gains over the same time period against the Euro, with the GBP EUR rate climbing from 1.1277 up to 1.1317 in the space of a few minutes.

There are no further UK tier one data releases until after the Eater break, so investors will have the long weekend to consider the future direction for the Pound. With the FTSE 100 continuing to perform strongly, it is possible that the Pound will begin next week on a more positive footing against the other majors.

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