Pound Euro Exchange Rate Dips Following Poor UK Retail Sales Data

Published: Thursday, 15 November 2012 18:00 BST - Written by David Woodsmith

STORY LINK Pound Euro Exchange Rate Dips Following Poor UK Retail Sales Data

There was further grim news for clients holding Sterling-denominated assets during today’s session, with the release of the latest set of domestic Retail Sales data from the UK Office of National Statistics. The October numbers showed at a much lower than anticipated annualised 1.1% - down from September’s counterpart figure of 2.7%. The dip in shop sales was blamed on cost-cutting on food and clothing purchases by UK consumers. It would also appear likely that British citizens have curbed their Autumn expenditure following the Summer’s Olympics-driven spending spree.

The figures added to the Sterling-negativity which yesterday’s poor UK labour market data and glum Bank of England Quarterly Inflation report has elicited. The generally Sterling-negative trading bias sent the GBP EUR exchange rate briefly down into the 1.2300s this morning. The Pound’s losses against the single currency would surely have been of a greater magnitude were it not for official whole of eurozone data, also released this morning, which revealed that the region slipped back into recession during the three months leading up to the end of September. Economic activity contracted by 0.1% in Q3, having shrunk by 0.2% in Q2, meaning that the euroland’s economy has fulfilled the technical definition of a recession, having registered two consecutive quarters of non-positive growth during the middle 6 months of 2012.

Elsewhere, this afternoon’s major data release has once again come from the US, in the form of October’s CPI Inflation figure. The number showed at an annualised 2.2%, above expectations, suggesting that persistent price rises in the US are failing to die down. The Pound has gained slightly against the US Dollar following the release, taking the GBP USD exchange rate up as high as 1.5879.

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