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It was a slow May for high street sales
Sterling was on the rise yesterday after the Bank of England (BoE) held interest rates and President Trump backed away from any immediate involvement in the Israel-Iran conflict.
The pound strengthened against just about all currencies yesterday, but that has all been thrown into reverse by the steepest monthly decline in retail sales for 18 months, just announced by the Office for National Statistics (ONS). According to retailers, sales in May were hit by good weather earlier in the spring enabling people to buy summer clothes, improve gardens and homes earlier in April. May’s decline certainly wasn’t reflected in the GfK Consumer Confidence reading, which improved for the second month in a row.
The big stories of yesterday started with the BoE holding rates at 4.25%, as expected. However, three of the nine-member Monetary Policy Committee had voted for an immediate cut, pointing to the next cut coming at its next meeting on 7 August. That will be a relief to many as UK credit card borrowing costs hit a 19-year high.
President Trump was in puckish mode yesterday, saying maybe he will and maybe he won’t commit US forces against Iran. This was seen as a softening of the position after he warned Tehran residents to flee earlier in the week, and saw the dollar weaken as risk appetite increased.
In more currency news, yesterday President Macron called for the European Central Bank (ECB) to bolster the euro’s position as a global reserve currency.
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GBP: Pound recovers
After three weeks of solid losses amounting to around 2% against the euro, there was something of a dead cat bounce yesterday. Sterling in fact recovered across the board yesterday, but that may not last long given parlous retail sales data just released. The high-level data continues with the Purchasing Managers’ Index (PMI) on Monday.
GBP/USD past year
EUR: Euro strength continues
Apart from against the pound, it was another positive day for the euro, with the biggest gains against the safe havens of the US dollar and yen. We’ve got a eurozone consumer confidence reading out this afternoon and business confidence (PMI) on Monday.
EUR/USD past year
USD: Dollar takes the day off
What is still, just about, the world’s reserve currency lost out against all but the yen and Norwegian krone yesterday. It was a Federal holiday yesterday (Juneteenth) and many hard-working American workers will be taking today off too, but Monday starts with home sales and PMI.
USD/GBP past year
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