Sterling has shot up during today’s trading session against all major currency pairs following some incredible UK Retail Sales out this morning. The estimate for month on month was 0.4% but came out at 2.6%. Year on year figures showed saw an increase on expectation from 2.6% to 5.3%. This data was the best its been for years and this surprise announcement will surely help GDP to be strong which includes a large proportion of retail sales.
With the UK economy having had a great run during the second part of 2013 this has really helped to reinforce the UK’s growth forecast which was recently pushed up for 2014. Confidence appears high in the UK which is the reason for such a strong performance for Sterling and with the Bank of England minutes due out next week on Wednesday I think we could see the Pound continue to rally next week.
Monday morning sees the release of industrial orders and the Produce Price Index for the Eurozone which is a measure of inflation. If things are worse than expected we could see the Euro weaken against the Pound during early Monday’s trading session.
With such good news recently you may think that Sterling will continue to rise at the same pace recently. However, as Europe is our biggest trading partner if exchange rates are too high this could damage British exports. In fact if you turn the clock back 12 months when Sterling vs Euro was trading at 1.23 and we were still in recession the market suddenly bottomed out and Sterling crashed. At the end of the first quarter of 2013 the UK came out of recession so it could be argued that there was an export led recovery.
Therefore, if you have a currency requirement coming up to buy Euros it may be worth taking advantage of current rates as during the last two months when Sterling has broken above 1.20 it hasn’t lasted for too long.
If you have a currency transfer to make and want to save money compared to using a bank then contact me directly Tom Holian [email protected]