Sterling has been given a boost this morning following the release of the latest Retail Sales figures. Markets had been expected a monthly rise of 1% but the actual figure was more than double that, coming in at 2.3%. It’s a very good barometer of the health of the UK economy, and as a result it’s sent the Pound higher.
Rates have climbed back up to around the €1.17 mark but still about 3 cents lower than it was a few weeks ago. Rising inflation is to blame for the decline, as it’s currently sitting at 2.7% and with no chance of the Bank of England raising interest rates, it’s likely to get higher. Wage growth however is only around 2.4% so in real terms, people have less money to spend. This is one reason for the Pound/Euro rate falling, the other being a stronger Euro. Now that elections are out of the way in France and Holland, it’s given the EU some much needed stability and the Euro has strengthened as a result, and become a little more expensive to buy.
All things considered however, the current rate is not too bad. At the end of last year it was in the €1.09’s, and even back in March this year it was as low as €1.13. With Brexit negotiations due to begin as soon as the UK election is out of the way, I wouldn’t be surprised to see the rate head back towards these levels.
Despite the Pound weakening off a little recently, GBP/USD rates are actually the best they have been in about 8 months, and this morning levels have finally broken through the $1.30 level. This is down to weakness in the US Dollar. Donald Trump has courted controversy yet again, amid allegations he has been interfering with Federal investigations, and that hasn’t helped the Greenback. It’s also now less likely the US Federal Reserve will raise interest rates next month, so the USD has dropped in value and become cheaper to buy.
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