British Pound Sterling GBP Outlook Hit by Weak Retail Sales Data

November 19, 2015 - Written by Toni Johnson

STORY LINK British Pound Sterling GBP Outlook Hit by Weak Retail Sales Data

GBP to USD Conversion Rate Slumped in Late Trade Yesterday following Hawkish FOMC Minutes

Last night’s minutes of October’s Federal Reserve FOMC monetary policy meeting proved to be more bullish on interest rates than had been anticipated and, initially at least, the US Dollar (currency : USD) benefitted.

The US policy-setting committee has one more meeting left this year and the suggestion in yesterday’s memos that the requisite economic conditions for a rate hike ‘may well be met’ by the time the final announcement of 2015 takes place on 16th December helped the Buck improve against the Pound Sterling (currency : GBP) during late trading yesterday.

GBP to USD Best Rate at 1.5294

The minutes went on to note the relative resilience to recent global economic headwinds, stating that, ‘the US financial system appeared to have weathered the turbulence in global financial markets without any sign of systemic stress.’

However, the Fed rate-setters’ apparent willingness to countenance interest rate ‘lift-off’ before the end of the year had unusual effects on the global markets after the initial feeding frenzy from traders worked its way through.

In a counter-intuitive move, global share markets spiked, with the broad-ranging S&P 500 gaining over 1% on the session.

Meanwhile, the burst of support for the Greenback which followed the release of the minutes soon wore off and by the middle part of today’s European session, the Pound Sterling US Dollar exchange rate had jumped to as high as 1.5294 GBP USD.

Disappointing British Retail Sales Limited GBP/USD Gains Today

Gains for the Pound US Dollar exchange rate on the day would have been of a greater magnitude were it not for this morning’s disappointing UK Retail Sales data for October.

The British year-on-year shop sales figure printed at a below-expectations 3.0% and Sterling suffered as a consequence.

The Office of National Statistics, which publishes the data, found that the below-par result was partly due to weaker than anticipated domestic purchases of food and beverages.

The exchange rate outlook for the Pound Sterling is now neutral.

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TAGS: American Dollar Forecasts Pound Dollar Forecasts Pound Sterling Forecasts