May 18, 2017 - Written by Ben Hughes
STORY LINK GBP USD Exchange Rate Rockets to Seven-Month High as Retail Sales Surge
The GBP USD exchange rate surged to a new seven-month high this morning as the UK’s retail sales grew faster than expected last month.
The Pound leapt over $1.30 for the first time since early October as data released by the Office for National Statistics (ONS) showed that UK retail sales surged from -1.4% to 2.3% in April, sailing past forecasts that sales would only grow 1.0%.
The ONS attributed the jump to increased spending around the long Easter weekend, which fell in April this year and the warmer weather seen last month.
The upbeat figures were a welcome surprise following the UK’s inflation and wage data earlier this week that suggested that household spending is likely to be squeezed this year by a widening gap between wage growth and consumer prices, although analysts predict that this uptrend in unlikely to persist over the coming months.
Howard Archer, chief European and UK economist at IHS Markit said;
April’s jump in retail sales looks unlikely to mark the beginning of a renewed upturn in consumer spending given the sharp and increasing squeeze on purchasing power… as rising inflation eats further into purchasing power with the pressure reinforced by ongoing muted earnings growth.’
Meanwhile the US Dollar continues to be weakened this week by concerns over the Trump administration in the wake of the firing of FBI Director Jim Comey.
Adding to Trump’s woes is the revelation that he revealed classified information from a US ally to Russian Foreign Minister Sergey Lavrov last week and allegations that he previously asked Comey to drop an investigation into former national security advisor, Michael Flynn’s links with Russia.
Markets fear that that the focus on Trump’s mishaps could cause the administration to lose focus on is goals for economic reforms, something that investors have been anxiously awaiting since the President’s inauguration back in January.
Moreover some observers are even suggesting that Trump’s recent actions could see him impeached, causing further instability in the US Dollar.
Trump’s response also has done little to reassure investors as he lashes out at the media, accusing them of a going on a ‘Witch Hunt’ and saying that ‘no politician in history has been treated worse or more unfairly’.
Looking ahead the GBP USD exchange rate may slip back below $1.30 tomorrow if a fall in domestic demand see CBI Industrial Trends Orders fall for a second month.
Meanwhile the US Dollar may rally this evening if a speech by Cleveland Federal Reserve President Loretta J. Mester causes the market odds of a Fed rate hike next month to rise once again.
Current Interbank Exchange Rates
At the time of writing the GBP USD exchange rate was trending around 1.3021 and the USD GBP exchange rate was trending around 0.7680.
International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.
TAGS: Currency Predictions Dollar Pound Forecasts