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Retail sales miss estimate, dragging down the pound

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Retail sales miss estimate, dragging down the pound

It’s the seventh consecutive day of losses for the pound versus the dollar thanks to June data on retail sales which showed that they increased less over the course of the month than previously expected.

While experts predicted a rise of 0.3%, sales rose by just 0.1%, according to the Office for National Statistics. This is fuelling rumours that the UK will have to push back the rise in interest rates.

Thanks to technical analysis which suggests that the UK currency is overvalued, the sterling is poised for its longest losing streak in 18 months. However, speaking to Bloomberg, senior currency strategist at Commerzbank AG Peter Kinsella said that there is still potential for the currency to continue on its tumble. “The currency is trading too high relative to where swap spreads should be trading. The risk-reward isn’t great in going long cable at these levels.”

A regression study of the difference between two-year UK and US swap-rates and the pound’s current trading level implied that fair value for the sterling is at $1.6926, a level it hasn’t fallen to since June 18th. Today, the currency fell by 0.2% against the dollar to $1.7009, setting up longest series of daily losses since January 2013. Against the euro, sterling dropped by 0.3% to 79.21 pence.

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6th Floor, ABSA house,
Ebene Cybercity,
Mauritius,
J. Balcikonio str. 9,
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Lithuania,

media contact

About

deVere Group – Foreign Exchange’s Public Relations Department deals with all areas of the media and external communications including international, national, regional, local, trade, consumer, print, broadcast, social and online. The Department aims to provide a helpful service to journalists, broadcasters and editors, amongst others, and reply to all media enquiries, including urgent enquiries out of hours, within agreed deadlines.

Contact

Our press office does not have access to client details and will not be able to assist with individual client enquiries. Please contact deVere Group – Foreign Exchange’s Head of Public Relations on [email protected] or call +44 2071220925.