Forex Outlook Today: Shop Til You Drop? Pound Sterling GBP Tumbles on UK Sales Data

July 23, 2015 - Written by John Cameron

STORY LINK Forex Outlook Today: Shop Til You Drop? Pound Sterling GBP Tumbles on UK Sales Data

UK Growth Data Could Impact Pound Sterling (GBP) Exchange Rate Trading Next Week

As the weekend approached the Pound was trending in broadly softer position as a result of a sub par UK retail sales report. However, next week's UK growth report for the second quarter is expected to show that the nation's economy expanded by 0.7% in the second quarter on a quarter-on-quarter basis, up from growth of 0.4% in the first quarter. This result would be Pound-positive.

Earlier...

GBP Tumbles Against EUR, USD Exchange Rates on UK Retail Sales Data

The latest UK Retail Sales data, published earlier today, showed an unexpected month-on-month drop of 0.2%. Market participants had been anticipating a monthly increase of 0.4%, so the Pound Sterling (currency:GBP) lost ground against all of the other sixteen most actively traded global currencies as a consequence.

Drilling down into the official Office of National Statistics numbers, analysts noted that the fall in the total value of revenues derived from British shop sales had fallen in June in spite of heavy discounting from domestic retailers. The tepid numbers also suggested that the Conservative party’s unexpectedly clear-cut General Election result in May had failed to engender the ‘feel good’ factor amongst British shoppers which had been anticipated.

UK Retail Sales Disappointment Pushes Back BoE Interest Rate Hike Expectations and Weakens Pound Sterling

James Knightley, an analyst at ING bank, stated digested the numbers earlier, observing that, ‘overall, it isn’t great news, but we feel that the trend for consumer spending remains strong. Indeed, retail sales are still growing 4% year on year and with consumer confidence at 15-year highs, real wages rising by around 3% year on year and employment continuing to move higher, the outlook remains positive for spending. We still look for a February Bank of England rate hike.’

RBNZ Decision Inspires NZD to GBP, USD, EUR Currency Market Gains

Elsewhere, the New Zealand Dollar (currency:NZD) has not suffered unduly from last night’s decision from the Reserve Bank of New Zealand to cut its interest rate by 25 basis points to 3.0% - the Pound Sterling New Zealand Dollar exchange rate dipped to an intraday low of 2.3291 earlier thanks to comments contained in the RBNZ’s accompanying statement alluding to the continue ‘rapid’ increase in Auckland house prices.

However, the forecast for the Kiwi remains far from positive thanks to RBNZ Governor Graeme Wheeler’s observation that the,‘global economic growth remains moderate, with only a gradual pickup in activity forecast. Recent developments in China and Europe led to heightened uncertainty and increased financial market volatility. Particular uncertainty remains around the impact of the expected tightening in US monetary policy’.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Daily Currency Updates Dollar Pound Forecasts Euro Forecasts Pound Forecasts