We have seen GBP taking further losses in Friday’s morning session against both the EUR and USD after UK retail sales were released this morning. British retail sales were expected to increase by 0.4% in December. Instead, we did see a contraction for December of -0.3% with supermarkets being the main underperformer, seeing the worst performance dating back to 2013. The contraction could have been worse if wasn’t for non-food stores, i.e. clothing and retail improving their figures from November and October. Interestingly the retails sales figures from November were revised this morning too and looked worse than what initially was recorded. Then for retail sales to contract by -0.3% in December indicating tough times for the economy. Yesterday we saw UK GDP figures grow slightly by 0.1% in November and with today’s poor retail sales in the most important month of the year that the retail sector depends heavily on. The government keeps on mentioning that their main focus is to fuel economic growth. For two consecutive days we have now seen signs of a downward spiral for economic development and pressure will be rising on the government and treasury Rachel Reeves to find quick solutions.
At 10am we have core inflation and inflation levels being released for the European Union. We have seen inflation increase for nations within the EU and expectations is that both core inflation and inflation levels will rise in January. Core inflation is expected to rise to 2.8% respectively inflation levels to 2.4%, compared to 2.2% back in December – back above the target rate from European Central Bank.
Ahead of next week we do have an interest rate decision from BoJ (Bank of Japan) and recent percentages have started to stack that it can take place in January. This could cause additional volatility to markets, with Japanese Yen being one of three safe haven currencies – with a rate hike could we see a sell off on the USD?
GBP/EUR 1.1838 GBP/USD 1.2183 GBP/AED 4.4764
GBP/AUD 1.9647 GBP/CHF 1.1106 GBP/CAD 1.7569
GBP/NZD 2.1780 EUR/USD 1.0280 GBP/ZAR 22.8322