The pound consolidated during the overnight trade after May retail sales release slumped more than economist anticipated. Retail sales gauge fell -1.4% from April as sentiment was hurt by government’s austerity measures, exceeding the -0.6% median forecast. Governor Marvyn King said MPC should hold rates at record low because weak growth in wages signals the current above target inflation will prove to be temporary. Market participants now speculate that central bank will increase its base interest rates from record low 0.5% in March 2012. Expect for the pound to remain in current ranges as there are no data releases or public speeches scheduled for today.
The euro dropped against most of its major rivals during the Asian session as Greek debt crisis escalated and threatens to spread to other peripheral countries within the Eurozone. The single currency slid after EU’s Juncker said if Greek bondholders carry the burden of country’s debt that would have unpredictable after-effects on the euro region. In addition, former Federal Reserve Chairman Alan Greenspan said that Greek default is ‘almost certain” and likely to happen in near future. Looking ahead to today, Eurozone’s trade balance and construction output headline the European economic calendar. Major release today comes from US where preliminary Consumer Confidence reading from the University of Michigan is expected to consolidate slightly in June.
Comments