Weak US Retail Sales Data Sends Pound To Dollar Exchange Rate Lower

Modified: Wednesday, 13 June 2012 20:34 BST - Written by David Woodsmith

STORY LINK Weak US Retail Sales Data Sends Pound To Dollar Exchange Rate Lower

Yesterday brought a packed schedule of data releases in the global economy. The overall verdict by market participants was negative, as evidenced by a move lower for North American stock indices and Europe’s bourses.

Perhaps the most damaging individual risk event came in the US, with yesterday afternoon’s May Retail Sales data. The shop sales figure showed a decrease for the second month on the trot, providing further proof that the world’s largest economy is beginning to grind to a halt. These concerns regarding the US and world economic picture saw the GBP USD exchange rate dip into the lower part of the 1.5500s by the US close thanks to a shift out of risk.

Elsewhere, whole-of-eurozone Industrial Production figures, released during yesterday morning’s European session, showed an annualised contraction of a sizeable 2.3%, providing a stark illustration of the negative multiplier effects which the widespread cuts in government spending and hikes in taxation, which have taken place across several eurozone economies over the past 12 months, are having. Amazingly, though, the euro was one of the best performing of the sixteen most-actively traded currencies on the day. This was attributable to the fact that the industrial production numbers were less bad than analysts had been anticipating.

Looking ahead to today’s session, the key note release once again comes from the US, in the form of this afternoon’s domestic CPI inflation data for last month. Economists are anticipating that the figure will point to a further cooling in US price rises. Given the weak tone of yesterday’s US Retail Sales numbers and the slowdown in job creation in the US economy, this may pave the way for renewed talk of a fresh tranche of Quantitative Easing in the US. Such whispers could see the Greenback lose ground ahead of Friday’s market close.

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