Pound To US Dollar Rate Climbs On Positive Retail Sales Data In The States

Published: Wednesday, 14 March 2012 09:00 BST - Written by Ben Hughes

STORY LINK Pound To US Dollar Rate Climbs On Positive Retail Sales Data In The States

The GBP USD exchange rate is 1.5696.

The US Dollar dominated proceedings in the global currency market yesterday, as first US retail sales numbers and then the FOMC interest rate decision grabbed the headlines.

Yesterday afternoon saw the release of strong US Retail Sales numbers, which built on recent encouraging American data sets. The numbers showed that shop sales in the States had increased by 1.1% last month, versus 0.6% growth in January. It appears that the world’s largest economy is a long way from slipping into recession.

The positive American numbers saw share markets head northwards – London’s FTSE 100 gained over 1% on the session, while Frankfurt and Paris gained even more on the day.

Later yesterday, the Federal Reserve Open Market Committee surprised no-one by maintaining US interest rates at their current record-low banding of 0.00-0.25%. The Fed’s accompanying commentary re-iterated its commitment to an ultra-loose monetary policy, stating that rates would be kept low at least until the latter part of 2014. This was music to the ears of equities traders worldwide, as share markets have been massively boosted by the flood of cheap money which the world’s central banks have made available to institutional investors in recent years.

Looking ahead, the highlights of today’s session are provided by UK employment data, due for release this morning and whole of eurozone CPI inflation numbers, out a little later. If the European inflation figures provide any slight indication that the rate of price rises in the region is picking up momentum, then analysts will quickly upwardly revise their ECB interest rate expectations. This could cause the euro to weaken and the GBP EUR exchange rate to make a concerted attempt to stick above the key psychological 1.2000 level.

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