Sterling Strength as Retail Sale Figures Offer Hope to a Flagging Economy

GBP EUR Looks to Employment Figures for Support

UK retail sale figures were released this morning and despite showing a drop of 0.2% on the previous month, figures rose 2.7% compared to this time last year. This month on month drop was expected due to the decrease of online sales during the Olympics but the improvement from last year offers hope to what can only be described as an otherwise flat economy. The UK has struggled to keep the feel good factor going since the Olympics and a run of poor economic data has seen the Pound move away from the four year highs it was experiencing only recently against the single currency. Today’s figures certainly brought some welcome respite for Sterling and it gained almost 0.75% against the EUR during Thursdays trading, moving back through the 1.25 barrier.

Today’s retail sale figures rounds up a busy week of economic data here in the UK. Yesterday the Bank of England released their monthly minutes and despite no indication that their would be a further interest rate cut, talk of Quantitative Easing was high on the agenda. Whilst the decision was made not to introduce another round of QE imminently, many of the members agreed that it was ‘highly likely’ we would see further monetary stimulus over the coming months. In fact one member felt their was a strong case to introduce this immediately, a clear sign that leading decision makers believe that our economy is still very fragile and will need further support on its road to recovery.

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