Pound euro exchange rate (GBP EUR) Slumps On Weak UK Retail Sales Data

May 22, 2013 - Written by David Woodsmith

STORY LINK Pound euro exchange rate (GBP EUR) Slumps On Weak UK Retail Sales Data

The Pound Sterling has come under heavy selling pressure during this morning’s European session, thanks to a raft of disappointing UK data releases. The most prominent of these was last month’s British Retail Sales data which showed a surprise drop off of 1.3% compared with the previous month. Analysts had been anticipating an annualised print of 1.8% for the closely watched shop sales number – the result of only 0.2% sent investors scrambling to shift out of Sterling-denominated holdings.

The latest UK Public Sector Borrowing numbers, released at the same time as the Retail Sales figures, were hardly any more encouraging for the Pound, showing that the UK’s coalition government borrowed a net £6.3bn last month alone. To put a positive spin on this, as the politicians are wont to do, this was significantly lower than the £8.9bn borrowed in April 2012. However, the fact that the UK’s mammoth budget deficit still stands at over £1tn and rising is a fact which is likely to hamper both the Pound and the British economy for years to come.

As today’s session got underway, many commentators were anticipating that the main event for Sterling would come in the form of the minutes of the latest Bank of England monetary policy meeting. In the end, the memos of the Bank’s latest get-together proved to be a damp squib, revealing that nothing had significantly altered since last month. As per previously, only three members of the MPC, (including current Governor Mervyn King), had voted in favour of a £25bn increase to Quantitative Easing. Next month is King’s final policy meeting before he steps down as Governor, but it appears unlikely that he will sway the other eight members to vote for a further loosening of Britain’s monetary policy before he quits the role. The Pound to euro exchange rate (currency : GBP EUR) slumped to 1.1654 earlier, but losses for the British tender would surely have been greater were it not for the BoE minutes.

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