The pound is mixed this morning, gaining against the broadly weaker euro, but consolidating against the dollar after UK retail sales fell the most in six months in November. Sales at stores dropped by -1.6% from a year earlier after dropping by –0.6% the month before. This month’s data indicate that the UK high street continues to face very tough trading conditions as even high levels of price discounting are failing to give a boost to sales. Economic turmoil in Europe and growing uncertainty elsewhere in the world has led the Organization for Economic Cooperation and Development (OECD) to indicate that the UK may already be in recession. Looking ahead to today, Bank of England is releasing the record of the November interim Financial Policy Committee meeting held on 23 November. Expect for the pound to remain driven by market risk aversion as EU leaders discuss the future of single currency at summit in Brussels this week.
The euro consolidated during the overnight trade after Standard & Poor’s said it may cut the rating of Germany and France and other 13 members of the euro-region. S&P yesterday put all euro-zone nations on watch for a credit downgrade, placing euro area’s six AAA rating countries under “Credit Watch Negative”, pending the result of the EU summit on December 09. Looking ahead to today, Eurozone growth figures are scheduled for release today, with expectations for the figures to fail to accelerate in third quarter. Expect for the euro to remain volatile for the reminder of the week before European Leaders meet in Brussels on Friday.
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