Could today’s UK retail sales data stop the Pound’s decline?

Today's Highlights

• UK retail sales could arrest GBP’s decline

• South African interest rate cut expected

 

Current Market Overview

There was a surprise in the Canadian data yesterday when core inflation stagnated in June, bringing the annual rate down to 2.0%; bang on the Bank of Canada’s target rate. That flattened off the declining GBPCAD exchange rate…for a day at least.

 Overnight we saw data from Japan confirming another annualised contraction of their exports. A 6.7% drop on the year is slightly better than May’s data but still a worry for the Japanese authorities. As this was a smidgeon better than forecast, the Yen actually strengthened a little on the news.

We also saw that Australia’s unemployment rate remained low at 5.2% in June. That didn’t alter the value of the Aussie Dollar particularly but the weakness of the Pound saw the GBPAUD rate slip yet again.
 
UK retail sales could arrest GBP’s decline
 
Sterling faces retail sales data today after consumer inflation was reported as having remained at 2.0% in June. There are hints that actual high street activity (or online more likely) rose slightly in June as decent weather prompted activity. That might be enough to stop the pound’s decline for a bit of respite but the B word still dominates.

 Aside from the alleged racism by the US President (go back to where you came from sounds pretty racist though doesn’t it) the US economy is still in good form. We will see initial jobless claims figures along with manufacturing and employment data from the Philadelphia Federal Reserve; all of which is forecast to be positive. Further USD strength should not be ruled out.
  
South African interest rate cut expected
 
And the South Africa reserve Bank is expected to cut their base rate by 25 basis points today; from 6.75% to 6.5%. Judging by past events, there is a good chance the Rand will weaken on the news, even though it is widely anticipated.

Sunshine on a rainy day

And on this day in 1938, Douglas Corrigan landed his aeroplane ‘Sunshine’ in Ireland, an epic 28 hours after leaving New York. What made it even more epic was the fact that he had filed flight plans to fly to California, having been refused his application to fly across the Atlantic. Hence, he was forever after known as Douglas ‘wrong way’ Corrigan. You would have though the ‘sea rather than land’ effect would have alerted him wouldn’t you?