British Pound to Euro and Dollar Exchange Rates JUMP on Strong UK Retail Sales Numbers

August 16, 2016 - Written by John Cameron

STORY LINK British Pound to Euro and Dollar Exchange Rates JUMP on Strong UK Retail Sales Numbers

The Pound to US Dollar rate has rallied higher after today's key sterling risk event, the UK Retail sales, beat market predictions of 0.1% to print at 1.4%. The British currency also jumped higher vs the euro.

• The Pound to Australian Dollar exchange rate today is converting +0.24 per cent higher at 1.70639 GBP/AUD.
• The Pound to Euro exchange rate converts +0.52 per cent higher at 1 GBP is 1.16045 EUR.
• The Pound to US Dollar exchange rate is +0.8 pct higher with a conversion rate of 1 GBP equals 1.31479 USD.

The UK Retail Sales numbers showed an increase to 1.4% compared to the market forecasts of just 0.1%.

The GBP to USD rate jumped to test best levels of $1.31 after the report showed every part of the UK retail sector enjoyed growth last month.

Foreign exchange market participants are yet to decide which way to take this morning’s official UK Consumer Price Index figures for July.

Headline writers have focussed on the slightly higher than anticipated year-on-year result which printed at 0.6% versus last month’s 0.5%.

The Office of National Statistics (ONS) which published the figures, noted in its accompanying statement that,

‘The July rate of 0.6% is a slight increase on the June figure and is the highest since November 2014.

Advertisement

The rates for 2016 to date are relatively low but are generally above those experienced in 2015, which was a year of historically low inflation, with the rate being at or around zero for much of the year.

The largest downward pull on inflation in July 2016 and for 2016 to date comes from prices for food and non-alcoholic beverages.

Upward pressures come from a variety of categories, most notably restaurant and hotel bills.’

Rising CPI Should Shore Up GBP vs EUR, USD But Threat of Further BoE Stimulus Weighs

On the face of it, the highest pace of domestic price increases for over eighteen months should have been a positive for the Pound Sterling (currency : GBP) by dint of the fact that it makes any further monetary policy loosening from the Bank of England (BoE) ostensibly less likely.

However, central bankers do not assess inflation statistics in the same fashion as headline writers; for many, the metric of choice when it comes to price rises is the Core CPI Inflation figure which strips out the effect of fuel and energy prices from the overall CPI inflation data.

Could Pound Euro Hit Worst Ever Rate of 1.02?

This morning’s UK Core CPI Inflation data showed at 1.3% - down from the previous month’s 1.4% and below expectations.

The Bank of England’s monetary policy committee members may view this result as a green light to further loosen their already ultra-loose monetary policy stance.

Such an outcome would heap further downside pressure on the Pound, potentially sending the GBP EUR exchange rate down towards its all-time low of 1.0200 which it touched off during the final days of 2008.

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: Currency Predictions Daily Currency Updates Poun Forecasts