FX round-up: Sterling traders unnerved by UK retail sales data as dollar resurgent

Andrew Schonberg Sharecast | 17 Feb, 2017 17:53 - Updated: 17:53 | | |

Sterling traders were unnerved on Friday by worse than expected UK retail sales data, which saw the British currency lower on most key crosses as the US dollar resumed resurgent.

At 17:17 GMT, sterling was down 0.46% to $1.2431, while it was up 0.08% to €1.1710. The dollar-spot index was up 0.46% to $100.900.

The British unit, however, was down against those of Australia, Canada and New Zealand, also falling against Japan's. It made gains on South Africa's rand.

"The pound has slid back today after UK retail sales for January unexpectedly declined by 0.3%, as rising prices appeared to drag on consumer spending," said Michael Hewson, chief market analyst at CMC Markets UK.

"The decline was particularly disappointing as it was the third successive monthly decline in a row, the worst performance in over 10 years," he said.

For some market watchers, the retail sales data served to push back expectations the Bank of England might be forced to lift interest rates by year's end, as UK gilt yields dropped back.

For others it appeared to undermine frequently rosy talk about the UK's economic performance in the wake of the highly controversial Brexit vote last year.

The surprise data came against a backcloth of rising UK inflation, Brexit and wider concerns about the rise of popularist politics both sides of the Atlantic.

Oanda senior market analyst Craig Erlam penned the decline in retail sales as inevitable.

"It seems to have happened very suddenly and could be indicative of further pain to come for the consumer," he said.

It was a point that Chris Saint, senior analyst at HL Currency Service, appeared to agree with.

"The data fuels concerns that consumer spending appetite is waning, especially as figures earlier in the week pointed to rising inflation and slowing wage growth biting into gains in real income," said Saint.

Meantime, the dollar turned in a mostly positive performance on key pairs on Friday, ahead of the long Presidents Day weekend.

It was up versus the euro, aussie, loonie, kiwi and rand, but down against the yen.

Hewson noted that the dollar had remained broadly strong across the board, but had not had much luck against the yen, which was continuing its recent run-up.

More news

16:56 China Africa Resources formal name change delayed

Shares fell in China Africa Resources on Thursday as the miner said there was a delay to its formal name change to Pembridge Resources.

16:41 Friday preview: Euro and US PMIs, Smiths Group results

Survey data on European and US services and manufacturing industries should give a good macroeconomic steer, while for UK corporate watchers Smiths Group is the biggest name reporting.

16:20 FTSE 100 movers: Next cuts a dash in dull market

Clothes retailer Next led the FTSE 100 risers despite reporting underlying pre-tax profits fell 3.8% to £790.2m last year and warned 2017 will be "another tough year" due to a shift away from spending on clothing and a squeeze on UK wages.

15:11 Facebook begins to roll out fake news alert tool

Facebook began its push against the tide of fake news in earnest on Thursday, as the social media giant rolled out a third-party developed fact checking tool which would alert a user if shared content was ‘disputed’.

14:55 Eddie Stobart Logistics plans AIM float to accelerate growth

Eddie Stobart Logistics has confirmed it plans to float on London's junior market next month to raise £130m to accelerate organic growth and make acquisitions.

13:52 Broker tips: Tullow Oil, Sainsbury's, Tesco, Standard Chartered

Analysts at RBC Capital Markets downgraded Tullow Oil on concerns about the oil and gas explorer's bid to shrink its debt burden through a rights issue.

13:47 Craneware wins sizeable contract extension from US hospital operator

Craneware which is specialises in software for healthcare billing, has won a “significant” contract extension from a US hospital operator.

13:27 Retail sales remain below seasonal trends, CBI finds

Retail sales picked up more than expected up until mid-March, the CBI found in a monthly Distributive Trades survey that backed up earlier official figures but did not fill economic experts with much optimism.

13:11 London midday: Stocks flat but pound pops higher after retail sales

Equity markets in London were little changed by midday, but sterling popped higher following the release of better-than-expected retail sales figures.

12:43 Franchise Brands to buy drains specialist Metro Rod

Franchise Brands has struck a deal to buy drain clearance and maintenance service provider Metro Rod for £28m, which will be partly funded from a £20m discounted equity placing.