The pound stabilised to a certain degree on Wednesday finding solid buyers below the $1.24 level. Against the euro, since breaking 90p on EURGBP (GBPEUR 1.1111), the pair has not been able to find support, however, potential speculative euro buyers remain cautious after the currency’s 10 week continuous appreciation.
Yesterday’s UK inflation numbers met expectation with the year-on-year consumer price index sitting at the Bank of England’s target of 2%. The release did little to assist sterling’s cause with the market reaction muted following the 0930 release.
The pound did manage to pick up some steam later in the day, more so against the buck. The bout of strength coincided with Theresa May’s last big speech which took place at Chatham House. The departing prime minister shared her reflections on the state of domestic and international politics. The speech revealed one of Theresa May’s most honest assessments on her own downfall – “I was told if I stand down, the votes would come. They didn’t come. That’s politics.” The cable rate (GBPUSD) edged up to $1.2450 while GBPEUR rallied up to €1.1090.
Today offers the last of 3 data tests for the pound this week. This morning we will receive a snapshot of the health of the UK consumer via the most recent retail sales report. Expectations are for a decline of 0.3% from the already negative -0.5% read from June’s report. With the bar set low, an upside surprise would potentially give GBP the impetus to stage a more profound rally. On the flip-slide, anything more negative could be the nail in the coffin for the not so great British Pound.
Written by Viv Savani. 8:33am, July 18th 2019
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