The Pound rallies to a three week high against the Dollar as UK retail sales declined by less than forecast
The Pound surged to the highest level in the three weeks against the Dollar yesterday as oil prices peaked and a UK government report showed that retail sales declined by less than anticipated in April.
A dramatic slump in house prices, rising inflationary pressures and the impact of the credit crunch has weighed on consumer spending with sales falling for a second consecutive month in April.
Nevertheless, the Pound rallied against the Dollar, breaching the 1.9800 barrier by the close of trading last night, as the decline in sales was significantly less than forecast and increased optimism that the resilience in spending will pull the economy through the housing slump.
However, the Governor of the Bank of England, Mervyn King, said last week that the economy was in danger of slipping into recession as consumer confidence fell to the lowest level since 1992.
The Pound also rallied against the Euro yesterday, rising towards 1.2600 at the close last night as faster inflation saw the probability of a June rate cut falling to just 1%. The dramatic shift in sentiment saw the Pound rally against 15 out of the 16 most actively traded currencies while the focus will switch to the final estimate of UK gross domestic product with economic growth expected to remain unchanged at 2.5% in the first quarter.
The Dollar’s dramatic intraday slide against the Pound saw the U.S currency plummet to the lowest level since May 2nd yesterday despite speculation that the Federal Reserve will raise interest rates by the turn of the year.
The minutes from the last FOMC meeting showed that policy makers viewed an April rate cut as a “close call” while a recent spate of hawkish comments from a number of Fed officials indicates that policy makers are ready to focus on the upside risks to inflation.
The Dollar snapped a two day losing streak against the Euro yesterday as oil prices finally retreated amid signs that the recent 16% increase isn’t justified by mounting stockpiles and steady demand.
As the price of crude oil breached $135 a barrel early yesterday, OPEC ministers admitted that they were powerless to stop the move despite reports that the rise in prices had more to do with institutional investors coming into the market rather that the issue of supply.
The correlation between rising oil prices and the decline in the Dollar has been increasingly apparent over the past week but the $2 drop in prices yesterday may see the U.S currency resume the upside momentum against the majors.
In terms of economic data, the Dollar shrugged off an earlier report on the U.S housing market as prices fell 3.1% in the first quarter while the weekly jobless numbers indicated that a drop in claims could spur payrolls.
Data Released 23rd May
U.K 09:30 GDP (Revised Q1)
EU 09:00 Flash Manufacturing PMI (May)
- Services PMI
U.S 15:00 Existing Home Sales (April)
written by Adam Solomon
Posted at: 21:29
0 Comments:
22 May 2008
The Pound rallies to a three week high against the Dollar as UK retail sales declined by less than forecast
The Pound surged to the highest level in the three weeks against the Dollar yesterday as oil prices peaked and a UK government report showed that retail sales declined by less than anticipated in April.A dramatic slump in house prices, rising inflationary pressures and the impact of the credit crunch has weighed on consumer spending with sales falling for a second consecutive month in April.
Nevertheless, the Pound rallied against the Dollar, breaching the 1.9800 barrier by the close of trading last night, as the decline in sales was significantly less than forecast and increased optimism that the resilience in spending will pull the economy through the housing slump.
However, the Governor of the Bank of England, Mervyn King, said last week that the economy was in danger of slipping into recession as consumer confidence fell to the lowest level since 1992.
The Pound also rallied against the Euro yesterday, rising towards 1.2600 at the close last night as faster inflation saw the probability of a June rate cut falling to just 1%. The dramatic shift in sentiment saw the Pound rally against 15 out of the 16 most actively traded currencies while the focus will switch to the final estimate of UK gross domestic product with economic growth expected to remain unchanged at 2.5% in the first quarter.
The Dollar’s dramatic intraday slide against the Pound saw the U.S currency plummet to the lowest level since May 2nd yesterday despite speculation that the Federal Reserve will raise interest rates by the turn of the year.
The minutes from the last FOMC meeting showed that policy makers viewed an April rate cut as a “close call” while a recent spate of hawkish comments from a number of Fed officials indicates that policy makers are ready to focus on the upside risks to inflation.
The Dollar snapped a two day losing streak against the Euro yesterday as oil prices finally retreated amid signs that the recent 16% increase isn’t justified by mounting stockpiles and steady demand.
As the price of crude oil breached $135 a barrel early yesterday, OPEC ministers admitted that they were powerless to stop the move despite reports that the rise in prices had more to do with institutional investors coming into the market rather that the issue of supply.
The correlation between rising oil prices and the decline in the Dollar has been increasingly apparent over the past week but the $2 drop in prices yesterday may see the U.S currency resume the upside momentum against the majors.
In terms of economic data, the Dollar shrugged off an earlier report on the U.S housing market as prices fell 3.1% in the first quarter while the weekly jobless numbers indicated that a drop in claims could spur payrolls.
Data Released 23rd May
U.K 09:30 GDP (Revised Q1)
EU 09:00 Flash Manufacturing PMI (May)
- Services PMI
U.S 15:00 Existing Home Sales (April)
written by Adam Solomon
Posted at: 21:29
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