Weak US Consumer Confidence Data Sends GBP USD Exchange Rate Higher

Published: Wednesday, 30 January 2013 09:00 BST - Written by James Fuller

STORY LINK Weak US Consumer Confidence Data Sends GBP USD Exchange Rate Higher

Yesterday’s session in the currency markets brought the release of worrying data from some of the world’s major economies, which served as a stark reminder that the global economic picture remains gloomy.

Dismal Spanish retail sales data, released in the early part of the day, showed that shop sales in the languishing Iberian economy had dropped for the 30th month on the trot last month. The startling official statistic also revealed that retail sales during the normally busy December period had plummeted by an annualised 10.7% compared to December 2011. Analysts have pointed the finger of suspicion at the door of Spain’s centre-right government who increased sales taxes as part of a package of stringent austerity measures last year.

Meanwhile, on the other side of the Atlantic, yesterday afternoon brought the release of a highly disappointing US Consumer Confidence Survey for January, which printed at a weaker-than-expected 58.6. Analysts had been anticipating a showing of 64.0. It appears likely that the drop in optimism amongst American economic participants was triggered by a hike in income taxes by the US government – still it could have been much, much worse if the Fiscal Cliff had not been avoided.

Looking ahead to today’s session, the US economy is once more likely to provide the leading headline news, with the release of the eagerly anticipated advanced showing of Q4 GDP growth data. Market expectations are low – Q3’s counterpart figure came in at an annualised 3.1%, but a pronounced drop to 1.1% is expected for Q4. It would appear likely that such an outcome would cause a flight to safety by institutional investors which would favour the safe-haven US Dollar. This would also be likely to send the GBP AUD and GBP NZD exchange rates higher.

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