The pound put on a mixed performance on Thursday, with the UK’s latest retail sales figures failing to drive demand for the currency despite faster-than-expected growth last month.
Sterling is showing limited movement this morning, with GBP/EUR flat at €1.1166, GBP/USD muted at $1.2711 and GBP/CAD stable at C$1.6716. GBP/AUD and GBP/NZD are holding steady at AU$1.7493 and NZ$1.9280 respectively.
Today’s session will see the release of the Eurozone’s latest CPI figures, with investors expecting a muted reaction in the euro despite a likely rise in inflation.
What’s been happening?
The UK published its latest retail sales figures on Thursday, revealing that sales growth saw a solid rebound from -0.5% to 0.7% in July.
The jump was attributed to strong online sales, with the Office for National Statistics (ONS) reporting that online sales struck a record high in July thanks to promotions like Amazon Prime Day.
However, the pound struggled to translate the upbeat sales figures into any meaningful gains, leaving Sterling exposed to the advances of some of its peers.
This was evident in the GBP/EUR exchange rate yesterday as the pairing edged lower as the ongoing recovery of the Turkish lira helped to quell fears that Turkey’s financial woes would spill over into the Eurozone.
Further strengthening the euro was the publication of the Eurozone’s latest trade balance, with EUR investors welcoming a sizeable upswing in the bloc’s trade surplus in June.
Meanwhile the GBP/USD exchange rate briefly rallied from the 14-month low struck on Wednesday.
Driving the upswing was a broad-based dip in the US dollar, with a bout of profit taking and renewed demand for emerging currencies being attributed for the pull back in USD.
What's coming up?
Looking ahead, with no notable UK data releases scheduled for today, movement in the pound is likely to be driven by the latest round of Brexit negotiations.
This could see GBP limp over the finishing line this week, with Sterling sentiment having the potential to tumble if talks continue to stall.
Meanwhile the release of the Eurozone’s latest CPI figures is unlikely to elicit much of a response from the euro this morning, with the European Central Bank’s pledge to leave interest rates on hold until well into 2019 diminishing any upside to an expected rise in inflation.
Finally the US dollar may close the session on a positive note this week with the release of the latest Michigan consumer sentiment index, with economists forecasting that August will have brought a slight uptick in household confidence.
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