UK Retail Sales boost pound
- Posted by Shyam Gokani in Uncategorised
- September 15, 2016
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Sterling rose briefly on Thursday after data showed British retail sales fell at a much slower pace than expected in August, although expectations that the Bank of England is likely to look through the data and keep policy accommodative checked gains.
Retail sales volumes edged down 0.2 percent on the month in August after jumping an upwardly revised 1.9 percent in July, the strongest July performance in 14 years, the Office for National Statistics said. August’s fall was smaller than the 0.4 percent drop forecast by economists in a poll.
Investors focused on the BoE announcement due at 1200 GMT. Analysts expect the Bank’s monetary policy committee (MPC) to reiterate that Brexit uncertainty will drag on the economy as Britain and the EU thrash out a new relationship over the next couple of years. The BoE cut interest rates last month to record lows and reintroduced an asset-purchase programme.
Under the MPC’s new calendar, the Bank’s next rate decision is scheduled for Nov. 3. That is when economists expect it to cut borrowing costs to around 0.1 percent.
Sterling fell before the Retail Sales data as investors awaited the Bank of England announcement on interest rates when it is likely to reiterate that monetary policy will remain accommodative in the coming months.
The pound has broadly stabilised in the past month, holding above 1.30 against the dollar, but more political noise is likely to be generated when EU leaders meet on Friday in Bratislava, where conditions for Britain’s departure from the bloc will be high on the agenda.
The BoE can be expected to hold fire at today’s meeting, It would be wrong, though, to be considerably more optimistic in view of the good economic data following the Brexit referendum.
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