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An upbeat UK retail sales report gave the pound a boost on Thursday, but a surprising ‘flash crash’ in the evening saw GBP give up its gains.
GBP/EUR fell from €1.1727 to €1.1627, GBP/USD dropped from $1.3041 to $1.2923, GBP/AUD tumbled from AU$1.7569 to AU$1.7380 and GBP/NZD fluctuated between NZ$1.8691 and NZ$1.8841.
Why is the pound down in the dumps this week? Keep scrolling to find out…
What’s been happening?
After struggling for most of the week the pound staged an impressive rebound on Thursday thanks to a better-than-forecast set of retail sales figures for the UK.
Despite stagnant wage growth and soaring inflation, British consumers shopped until they dropped in April. Retail sales surged by 2.0% on the month and 4.5% on the year – smashing forecasts of 1.0% and 2.6%.
Although economists expect consumer spending to fall in the months ahead, the unexpected resilience in retail sales shown last month was enough to help the pound recover much of this week’s losses.
GBP/USD was also supported by the ongoing Trump scandal, with impeachment murmurs keeping the US dollar under pressure.
However, in the evening the pound experienced an unexplained reversal. The sudden GBP losses were attributed to a ‘flash crash’ and the currency remained at its lower levels on Friday.
What’s coming up?
Of the economic reports due for release today, the ones most likely to inspire currency fluctuations include the Eurozone’s current account and consumer confidence figures (with positive results having the potential to boost the euro) the UK’s CBI trends total orders/trends selling prices stats and Canada’s retail sales and inflation numbers.
Next week is pretty light in terms of influential UK data, with only public borrowing and first quarter GDP stats due to have much of an impact on the pound.
A slower rate of growth in the first three months of 2017 could leave Sterling struggling.
Of course, with the UK general election fast approaching, political developments could take centre stage in the weeks ahead. The pound may be bolstered if polls show that support for the Conservatives remains strong as the general consensus appears to be that a win for Theresa May could strengthen Britain’s hand during Brexit negotiations.
