Sterling sank by 0.5% on the day against the dollar and Euro this morning after British retail sales racked up their third monthly fall on the trot in January, disappointing expectations for a rise.
December’s downwardly revised -2.1 percent was the second biggest monthly fall since comparable records began 20 years ago, and added to signs that consumers are beginning to suffer from a rise in inflation and worries over the outlook for the economy as Britain prepares to leave the European Union.
Retail was the beating heart of the UK economy in 2016, so with consumer spending sliding, in the coming months we could see the pound push lower against both the euro and the dollar.
The looming Brexit issue casts its big shadow over the pound and it’s always going to impact on sterling’s fortune until we get an idea over how the whole thing is going to pan out.
Brexit minister David Davis said this week that government was on course to meet its end-March deadline to launch the formal divorce procedure from the EU but did not see Britain doing so at an EU summit next month.