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Currency News 17/1 - Sterling jumps to year High v Euro after positive Retail data.

Currency News 17/1 - Sterling jumps to year High v Euro after positive Retail data.

 
Old Jan 17th 2014, 10:55 am
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Default Currency News 17/1 - Sterling jumps to year High v Euro after positive Retail data.

UK News & Data releases

This morning at 9:30am we saw the latest UK retail sales figures. These are watched closely as they reflect the overall economic situation in the UK, and for this reason the numbers often have an effect on exchange rates. The figures this morning were significantly above forecast.

The numbers showed that sales in December were up 5.3% on a year ago, and this is the fastest annual sales growth in more than nine years. The forecast was for 2.6%, so it's significantly better than expected. The figures from the Office for National Statistics (ONS) suggested growth in consumer spending above the expectations of many analysts.

The spike this morning has pushed GBP/EUR rates back up to a 12 month high. We've seen this happen several times now over the last 6 weeks, only for the gains to be short lived and rates to drop back away again, so if history repeats itself we could well see rates drop back away. If you need to convert Pounds to Euros, this could be a good opportunity to take advantage of this spike.

Euro Zone & Swiss Franc News & Data releases

The latest ECB press conference does appear to have had the desired effect of preventing any significant rise in front end yields, so that strength in other economies is likely to see yield spreads move against the EUR, suggesting scope for EUR weakness if we see a risk positive tone develop in markets.

However, the generally softer tone in yields yesterday in response to weaker equities is less likely to generate any EUR losses. Many still expect some near term Euro weakness, with potential for a test of 1.3550, but it would probably require a more risk positive market tone for this level to break.

US Dollar News and Data Releases

The USD index once again failed to break above the January high of 81.19 yesterday despite an initial positive tone, but the risks of a significant move still look biased that way as US data has continued to encourage, and Fed comments continue to suggest further tapering at the FOMC meeting on January 29th.

However, there is nothing on the calendar today that looks likely to be sufficiently significant to boost the USD through key levels, so the range-bound picture against the majors seems likely to persist.

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