Left Menu
Development News Edition

UPDATE 2-Pound reverses gains after bleak British retail sales

UPDATE 2-Pound reverses gains after bleak British retail sales
Representative image Image Credit: Pixabay

The pound gave up early gains on Friday after UK retail sales data came in weaker than expected, prompting investors to price in greater chance interest rates would be cut at the end of this month.

Sterling rose to a six-day high before investors resumed selling the currency, in a week dominated by dismal data and dovish comments from policymakers. Several Bank of England policymakers, including outgoing Governor Mark Carney, signaled this week that a rate cut was likely unless economic data improved.

Economic data showed further weakness on Friday, with British consumers failing to increase their spending in December for a record fifth straight month. "... The lack of inflationary pressure could easily persuade the Bank of England that the time is right to inject some zip into the economy with a rate cut, and sterling is likely to recalibrate accordingly," said Ayush Ansal, chief investment officer at Crimson Black Capital.

Weak inflation readings came in on Wednesday and weak growth numbers on Monday, including slower industrial and manufacturing production. That has raised the likelihood of a quarter-point rate cut in January to nearly 70%, according to Refinitiv data. Sterling was last down 0.3% at $1.3033 and fell 0.1% against the euro at 85.22 pence.

However, the British currency held up strong compared with where it was trading earlier in the week when it fell to a three-week low of $1.2955 even though markets were not expecting a rate cut. Investors now believe Britain and the European Union are more likely to partly agree on a trade deal after Britain quits the EU on Jan. 31, avoiding an abrupt, disorderly departure at the end of this year.

After Prime Minister Boris Johnson said that a trade deal was very likely by the end of 2020 -- when the transition period ends -- a consensus grew that the two sides would agree on a deal on goods this year and postpone one on services into next year. An agreement on goods would be easier to achieve since the EU is a big exporter to the UK, analysts said.

"After more pragmatic and more balanced comments from both sides, the market has started to realize that this is a more likely scenario," said Athanasios Vamvakidis, global head of G10 forex strategy at Bank of America. Real money investors have remained long sterling and hedge funds have stayed neutral, which has helped keep the pound above $1.30, Vamvakidis said. He does not see sterling falling $1.30 unless the BoE does ease cut rates in a couple of weeks.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

Download The Devdiscourse News App for Latest News.



Future of Food: Technology fostering the road to global food security

Technological innovation can help address most of the pressing issues facing the world today including food security by enhancing productivity, improving financial services, managing resources, addressing environmental concerns, etc....

Conspiracy theories on COVID 19: Legislators, Scientists, and Journalists all joined the Caravan

Conspiracy theories are not new for virus epidemics. There have been conspiracy theories on HIV-AIDS, Polio Vaccines, Ebola Virus, and several other diseases as well. However, what makes the 2019 Novel Coronavirus different from others is ...

Now it’s a war, Uganda deploys army to combat locust swarms

Its for the first time after 1986, the locust swarms have attacked Uganda twice in a season. With the increasing number of countries of Africa under attack by locust swarms, the problem seems to have taken a regional paradigm. Its very diff...

Top 10 Fake News, Myths and Realities on 2019 Novel Coronavirus COVID 19

With nearly 1500 deaths by January 14 and around 65,000 infections in China, the Novel Coronavirus 2019 has become one of the worst health epidemics of the 21st Century. However, 8,573 people have been cured but the rumor mongers are a...


Latest News

Astros, Red Sox, Major League Baseball urge dismissal of sign-stealing lawsuit

The Houston Astros, the Boston Red Sox and Major League Baseball asked a U.S. judge to dismiss a proposed class-action lawsuit by DraftKings participants who said the teams electronic sign-stealing distorted fantasy baseball contests they w...

UPDATE 1-Austria stops train from Italy due to suspected coronavirus infections

Austria has denied entry to a train from Italy on suspicion that two travellers might be infected with the coronavirus, the interior ministry said on Sunday.Tonight a train on its way from Venice to Munich was stopped at the Austrian border...

Shots fired during protest near Haiti's presidential palace

Shots were fired near the presidential palace in the Haitian capital Port-au-Prince during a protest that was organized by police who are demanding better pay and conditions, two Reuters witnesses said.It was not immediately clear who fired...

Boxing-Fury says 'Let's go A.J.' though Wilder first has rematch option

Tyson Fury says he expects Deontay Wilder to take up the option of a rematch of their heavyweight championship bout but is ready for fellow Briton Anthony Joshua if the American declines. Speaking after his seventh-round TKO victory over Wi...

Give Feedback