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20th February 2017 - Exchange Rates News written by TorFX for Exchange-Rate.net
Sterling performed poorly last week, plummeting in response to news that UK consumers reined in retail spending in January.
Retail sales are an important part of Britain's Gross Domestic Product (GDP). As a result, Friday's news that retail sales had slowed from -2.1% to -0.3% month-on-month and missed the forecast 0.9% increase left investors concerned. The print has now dropped for three consecutive months for the first time since 2000. This, coupled with slower wage growth in late 2016, could see UK citizens being financially squeezed this year. However, if manufacturing and exports manage to remain strong, Britain could still see decent growth this year even amid a retail sector slump.
On Monday morning, the Pound was bought from its worst levels amid hopes that the House of Lords would be voting for amendments to the Article 50 bill.
The Pound to US Dollar exchange rate slumped by over half a cent during Friday's session due to Britain's underwhelming January retail sales figures.
The US Dollar, on the other hand, remained sturdy thanks to increasing Federal Reserve interest hike bets. Fed Chairwoman Janet Yellen even suggested during the week that waiting too long to hike rates again would be 'unwise', while US inflation prints beat expectations.
The 'Greenback' continues to see psychological resistance however and has struggled to break key levels due to market anticipation for the new fiscal policy of US President Trump. Trump has proposed major changes in fiscal policy but has yet to implement them, leaving forex markets jittery.
The Pound to Euro exchange rate lost almost half a cent in value last week as British economic hopes worsened. While the Euro performed poorly earlier in the week due to political concerns and slowing growth, it was later able to benefit from news that the EU-Canada trade deal, CETA, had been pushed through European Parliament.
However, the Euro remained vulnerable to the strength of the US Dollar.
The Pound to Australian Dollar exchange rate fell last week amid underwhelming UK ecostats. The Australian Dollar met key psychological resistance later in the week however after the strength it has seen in recent weeks.
AUD trade is likely to be lighter this week. The Reserve Bank of Australia (RBA) will be publishing its latest minutes report on Tuesday however, and the tone adopted regarding interest rates will be a big driver of 'Aussie' movement.
Any further news from US President Trump on US fiscal policy could also weaken the Australian Dollar as it may also lead to higher Fed interest rate hike bets.
The Pound to New Zealand Dollar exchange rate fell on Friday due to disappointing UK retail sales data. However, the 'Kiwi' was unable to capitalise on Sterling weakness as NZ data published later in the week was generally disappointing.
New Zealand's retail sales slowed from 5.1% to 4.2% year-on-year in Q4 2016, while the quarter-on-quarter print remained at 0.8% despite being predicted to improve to 1%. The Roy Morgan consumer confidence report for February also slipped.
However, Monday's New Zealand services index figure for January improved to a solid 59.5. 'Kiwi' demand could also improve if Monday's Global Dairy Trade (GDT) auction indicates that prices for New Zealand's most lucrative commodity have improved.
The Pound to Canadian Dollar exchange rate slipped last week as UK data disappointed, but demand for the 'Loonie' was also generally weak due to disappointing oil market news.
The price of Canada's most lucrative commodity dropped by -1.6% throughout the week as US oil inventories surged. Oil producing nations not involved in OPEC price cuts have ramped up production to take advantage of higher prices but this could weigh on prices in coming weeks.
GBP/CAD jumped on Monday morning as oil prices remained solid despite oversupply concerns.
Disclaimer: This update is provided by TorFX, a leading foreign exchange broker, its content is authorised for reuse by affiliates.
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