Sterling had another mixed week last week. It gained a bit of ground against the € and lost a bit of ground against the US$. UK economic data released was variable with employment data surprising to the upside and November retails sales to the downside. We are now in the final throes to Christmas, a key trading period for retail worldwide and especially in the UK. The expectation is that retail sales will be ahead of last year and this is very important for the UK retail industry which has had significant problems this year and key to showing that the consumer is recovering from a very tough year. I think most of us will be looking forward to putting 2009 behind us and a much more productive 2010. This week we have the release of updated third quarter gross domestic product figures which are expected to show us still in recession but closer to being out of it that the preliminary figures first showed. This would be helpful for sterling showing that we aren't lagging the rest of the world as badly as first shown.
The US$ is enjoying a period of strength gaining ground against sterling and the euro. No main reason seems to be the primary cause. In the US there is a hope that unemployment is slowing and close to its peak, which is clearly US$ supportive, but the greater influence may be that investors have been caught out by the US$ strength and continue to cover their exposure especially with the year end approaching. The Federal Reserve kept interest rates on hold which was as expected and reiterated that interest rates will be kept low for a while. This week we have housing sales data which is expected to be on the up.
No comments:
Post a Comment