UK Retail Sales up 0.2%, ‘Cable’ Holds Gains
The Pound Sterling to US Dollar (GBP/USD) exchange rate consolidated previous gains after the UK’s retail sales report showed growth of 0.2% in May rather than the -0.2% contraction anticipated.
US inflation data also failed to show the acceleration in consumer price gains expected by economists, pushing Fed rate hike bets even further back and undermining demand for the US Dollar during the North American session.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5908
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3953
Newsflash: GBP/USD Surges to 1.59 before UK Sales Data
After initially holding steady following the Federal Open Market Committee (FOMC) interest rate announcement, the Pound Sterling to US Dollar (GBP/USD) exchange rate leapt to 1.59 ahead of the publication of UK retail sales data.
If retail sales climb, instead of showing the decline forecast by economists, the Pound could push higher still in the hours ahead.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5912
Impressive UK wage data saw the Pound Sterling to Euro (GBP/EUR) exchange rate near the 1.40 level and the Pound Sterling to US Dollar (GBP/USD) exchange rate breach 1.57 – ‘Cable’ held these gains after the FOMC announcement.
Pound Sterling to Euro (GBP/EUR) Exchange Rate News: UK Wage Data Exceeds Forecasts, BoE Minutes Help Pound Gain on EUR, USD, AUD, NZD
Over the course of the European session the Pound Sterling exchange rate jumped against the Euro (GBP/EUR), US Dollar (GBP/USD), Australian Dollar (GBP/AUD) and New Zealand Dollar (GBP/NZD) as an unexpectedly strong increase in average UK earnings drove demand for Sterling through the roof.
After average earnings were shown to have climbed by a four-year high of 2.7%, rather than the 2.1% expected, the GBP/EUR exchange rate extended earlier gains and advanced to a one-month best.
The GBP/USD exchange rate moved above 1.57 and the Pound gained by over 1% against both the Australian Dollar and New Zealand Dollar.
In the view of one industry expert; ‘With price inflation at some point set to rise back toward 2%, a continuation of real wage growth at the current rate will have to be earned by a return to a more normal rate of productivity growth; if not there will eventually be renewed upward pressure on prices and, ultimately, interest rates. In recent months UK workers have benefited from an economy merely mimicking a strong underlying recovery. We should enjoy this while we can. But a genuine sustained recovery will need to be based on higher productivity.’
The minutes from the Bank of England’s (BoE) latest policy meeting also helped the Pound Sterling to Euro and Pound Sterling to US Dollar exchange rates advance as the Monetary Policy Committee (MPC) inferred that the headwinds facing the UK economy are lessening.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Falls as Greek Central Bank Warns of ‘Painful’ Grexit Today
The latest developments in the Greek negotiations also weighed on the Euro.
While Greek Prime Minister Alexis Tsipras created further furore by claiming the Hellenic nation is being asphyxiated by its creditors, the Greek central bank has commented on the situation for the first time.
It stated; ‘Failure to reach an agreement would… mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the Euro area and, most likely, from the European Union. Striking an agreement with our partners is a historical imperative that we cannot afford to ignore.’
The stern words limited demand for the Euro and the common currency dipped against a number of its rivals.
US Dollar to Pound Sterling (USD/GBP) Exchange Rate Weaker after FOMC Interest Rate Announcement – Borrowing Costs Still Set to Increase this Year
The US Dollar to Pound Sterling (USD/GBP) exchange rate remained softer in the wake of the Federal Open Market Committee’s (FOMC) hotly anticipated interest rate announcement.
The central bank implied that rates are still on course to be increased later this year.
As stated by Bloomberg; ‘A rebound in job growth is giving Fed officials reason to look beyond a first-quarter economic slowdown as they consider when to tighten policy. At the same time, inflation remains below their target, and central bankers say the timing of a rate increase depends on how economic data unfold.’
Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: UK Retail Sales Data, ECB Economic Bulletin, US Inflation Data in Focus
Whether or not the Pound holds or sheds today’s gains against the Euro and US Dollar largely depends on how the UK’s retail sales report prints.
Sales are expected to be down -0.2% on the month and if that proves to be the case it could limit demand for Sterling.
The Pound Sterling to Euro (GBP/EUR) exchange rate may also record movement in response to the European Central Bank’s (ECB) economic bulletin.
The bank may adopt a cautious tone in light of recent events and the Euro could falter as a result.
Meanwhile, considerable Pound Sterling to US Dollar (GBP/USD) volatility is likely to be occasioned by the US Consumer Price Index.
Slower inflation could put back Federal Reserve interest rate hike bets and undermine demand for the ‘Greenback’, but accelerating consumer prices would be US Dollar supportive.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of and the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5728.