Sterling rises briefly on Retail Sales – 22nd August 2016
Sterling rises briefly on Retail Sales – 22nd August 2016
Team GB finished a fantastic second in the medal table at the Rio Olympics only behind the US; during the same two weeks, Sterling finished second bottom against the most actively traded currencies ahead of the Australian Dollar.
Mercifully for UK holidaymakers, Sterling found some light relief towards the end of last week following decent figures for UK inflation and employment. Thursday’s retail sales data for July also came as a huge relief to those who had feared economic activity falling into a black hole in the aftermath of the Brexit vote. Sales were up by 1.4% on the month and 5.9% higher than July last year.
The numbers were well ahead of the forecast 0.2% and 4.2% increases and were worth an immediate cent to Sterling against the US Dollar and the Euro. Unfortunately, the post retail sales gain have now more or less been eroded and it is fractionally lower against the US Dollar which benefited from comments by the US Federal Reserve members who did their utmost to rekindle expectations of a interest rate increase this year.
Foremost among them was Stanley Fischer, the Fed vice chairperson. While stopping well short of promising a 2016 rate hike Mr Fischer gave a particularly upbeat economic view to his audience in Aspen. “We are close to our targets… I expect GDP growth to pick up… employment has increased impressively… I am an optimist.” He left investors still uncertain about a rate increase next month but gave the strong impression that, if it were up to him, there would be one.
There is no useful ecostats today so investors will be looking ahead to what the rest of the week might bring. Tomorrow sees the provisional purchasing managers’ index readings; on Wednesday it will be second quarter growth in Germany; US durable goods orders come on Thursday; Friday’s statistical highlights are the revised second quarter GDP data for Britain and the States.
An even bigger deal on Friday will be the Fed chairperson’s speech at the Jackson Hole Policy Symposium with investors waitng to hear if Ms Yellen repeat Mr Fischer optimism.