Pound Sterling Gains Against US Dollar After Strong British Retail Sales Data

February 20, 2012 - Written by David Woodsmith

STORY LINK Pound Sterling Gains Against US Dollar After Strong British Retail Sales Data

The Pound Euro exchange rate (GBP EUR) is 1.2020, the Pound to US Dollar exchange rate (GBP USD) is 1.5858.

Last week’s session in the currency markets ended on an uptick for Sterling, with the release of better than anticipated UK Retail Sales figures for January. The numbers showed an annualised increase in British shop sales of 1.9%, versus expectations of a contraction of 0.1%.

On a busy day for data releases, German Producer Price Index also beat expectations, to show at an annualised 3.4% versus analysts’ expectations of 3.2%. The higher than expected German factory gate price figure would appear to show that the ECB is yet to bring inflation in the eurozone under control. Given the hawkish tone of the last set of minutes released by Europe’s central bank, the next eurozone rate cut may be a while off.

Meanwhile, on the other side of the Atlantic, Friday afternoon’s session saw the release of CPI Inflation data in Canada and the US. Both data sets came out higher than analysts had anticipated, suggesting that the Bank of Canada and Federal Reserve may have limited scope to further loosen their domestic monetary policies in coming months.

Elsewhere, the threat of further sanctions on Iran from Western states concerned about the Persian country’s continuing pursuance of its nuclear programme, have led Iranian leaders to announce that the country will sell no more oil to the UK or France. If this situation gets worse, then global appetite for risk could dip, causing the safe-haven US Dollar to be supported. Alternatively, market participants may be encouraged by comments from France’s Finance Minister which confirm that all of the elements are now in place for Greece to receive its next tranche of bail-out funding.

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