Retail sales in the UK recorded strong sales volumes in January, seeing its first monthly rise since August. The retail sector overshot expectations with margin, coming in at 1.7%. Comparing to its previous month, December, that tends to the best performing month for the retail sector backtracked into negative territory. Expectations ahead of the release this morning was an uplift to 0.3%. That the retail sector now coming in at 1.7%, could show growing consumer confidence. Interestingly it was down to food stores that retail sector had such an uplift, with discounted goods being snapped up. Overall, non-food stores did not have the same performance and it’s likely that consumers still hold back and only purchasing the essential goods needed. However, we did see an instant reaction for the GBP to EUR and USD – continuing its momentum we have seen in the last few days. Even if its initial morning reaction on the markets has calmed down and seen a retraction to similar levels we did see yesterday – GBP is in a good position.
We have seen a struggling EUR throughout the week and this morning a number of the European Union’s states did release manufacturing forecasting, which continues to show a low level of confidence in this economy landscape of incoming orders – this can easily lead to less productivity and continue to slow down the economic growth.
This afternoon we do have US existing home sales being released, its forecasted to drop off from its previous month and would be the first time since October that home sales decline. Expectations is that numbers will come in at 4.12m – compared to last months figure of 4.24m. US are involved in every economic topic at the moment and in its last few days we have seen the US stock-market falling and likely so the USD to both the EUR and GBP. A strong retraction of home sales could cause further volatility to the safe-haven currency and see additional declines on the markets.
On Sunday, Germany goes to the polls for an election. The coalition of social democrats, liberals and greens have collapsed and there is likely to be a change of political leadership for the strongest economy in the European Union. As the polls stands right now Christian Democratic Union (CDU) is in the lead with 30%, meaning that it would require a new coalition to hold mandate of the German policy-making.
GBP/EUR 1.2069 GBP/USD 1.2644 GBP/AED 4.6468
GBP/AUD 1.9810 GBP/CHF 1.1349 GBP/CAD 1.7952
GBP/NZD 2.1971 EUR/USD 1.0463 GBP/ZAR 23.2250