RationalFX : Sterling falls after retail sales disappoint

RationalFX : Sterling fell on Friday after UK retail sales data came in weaker than expected…

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The likelihood of an interest rate cut at the end of January looks like a possibility, as Policymakers including outgoing Governor Mark Carney have all suggested this unless the economic outlook improves. Investors are also starting to price in a rate cut at the end of the month, putting pressure on sterling.

Retail sales fell by 0.6% on a month to month basis, well below its forecast of 0.5%. This was the fifth consecutive month in which consumers failed to increase their spending. Furthermore, weak economic data earlier in the week with inflation readings below its target also put pressure on the pound.


The dollar rose to a one week-high against the euro on Friday, as economic data pointed out to solid economic growth and reduced fears about an impending slowdown due to the ‘Phase One’ agreement signed by the US and China. US homebuilding surged to a 13-year high in December as activity increased across the board, suggesting the housing market recovery was back.

Furthermore, data showed that US retail sales increased for a third straight month in December, while a part of manufacturing activity in the Mid-Atlantic region rebounded in January to its highest level in eight months.

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