Yesterday it emerged that Retail Sales within the UK were strong last month, as the strong performance from England in the world cup along with the hot weather helped push up sales of food and other goods used to measure the Retail Sales figures. A Reuters poll had expected to see gains of 3% annually but the actual figure released was 3.5% and usually this would result in a boost to the Pounds value but this failed to materialise. At the time of writing the Pound to Euro exchange rate is actually trading close to the levels it started at back at the beginning of this week, after the pair hit a 2018 low of 1.1075 last week.
Sterling weakness based on “no deal” Brexit comments
The most recent bout of weakness for the Pound seems to have stemmed from comments by Dr Liam Fox, the Secretary of State and a member of the Conservative Party. He stated that there is a 60% chance of a ‘No deal’ Brexit and this has spooked the markets. Jeremy Hunt, the Foreign Secretary who took over after the resignation of Boris Johnson has also offered his opinion as recently as yesterday. Hunt warned that a ‘messy’ no deal Brexit would be a mistake that we would regret for generations.
Next week the economic calendar looks light in terms of UK releases, and for this reason I expect the Brexit related news and updates to remain the biggest driver of Sterling value. Perhaps the most prominent release will be Tuesday morning’s Public Sector Net Borrowing for July figure. This will cover the amount of new debt held by the UK government and has been a cause for concern in the past.
If you wish to be updated in the event of a major market movement, do feel free to get in touch with me at [email protected].