Sterling goes up and Sterling goes down again – 22nd May 2017
Sterling goes up and Sterling goes down again – 22nd May 2017
Sterling ended last week pretty much as it opened on Thursday however, that doesn’t tell the whole story. It went up by one US cent on Thursday morning, drifted half a cent lower, plunged another cent and then recovered. All of that left it just about unchanged against the US Dollar as trading closed for the week.
Sterling was already pointing north when the UK retail sales figures came out which were up by 2.3% on the month and 4.0% on the year compared to forecast increases of 1.0% and 2.0%. Although there was talk of the Easter spending spree being a last hurrah before declining real earnings and maxed-out credit cards bring everything to a stop, investors bought into the headline and Sterling shot up.
Several hours later Sterling fell sharply for no obvious reason. The best guess at the time was that investors decided it was looking expensive above £/$1.30 and pushed it back below its levels immediately prior to the retail sales data. The drop was followed by a gentle overnight recovery and an inexplicable jump on Friday morning. From Thursday’s opening levels the pound is up by a quarter of a US cent and down by a fifth of a Euro cent. It is unchanged on average against the other dozen most actively-traded currencies.
If the end of last week was exciting Sterling it was terrifying for the Brazilian Real as it plunged -8% after a news paper reported credible evidence of president Michel Temer engaging in bribery. The Bovespa stock index dropped -10%.
Away from Britain there was little on Thursday and Friday to motivate investors and that is likely to be the situation today too.
Thursday’s Canadian inflation figures were all a touch lower than forecast, with the Bank of Canada’s core consumer price index down by two ticks at 1.1%. Retail sales there were up by 0.7% in March, boosted by strong car sales. Sales excluding autos looked rather less impressive at -0.2%. The CBI reported an improvement in UK manufacturers’ order books with the reading up from 4 to 9. Euroland consumer confidence went up from -3.6 to -3.3 in May, according to the EC.
This week kicked off with Rightmove’s house price index, which was up by 3.0% on the year, and a narrowing of Japan’s trade surplus. And that’s just about it for the day.