Sat, Oct 23, 2021 @ 10:30 GMT
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British Pound Softens as Retail Sales Slide

The British pound has lost ground in the Wednesday session, continuing the downward movement seen on Tuesday. In North American trade, GBP/USD is trading at 1.4103, down 0.39% on the day. On the release front, the CBI Realized Sales survey came in at -8, well off the estimate of +7 points. Later in the day, the UK releases GfK Consumer Confidence, with the markets braced for a second consecutive drop of -10 points. Over in the US, Final GDP impressed with a gain of 2.9%, beating the estimate of 2.7%. There was more good news as Pending Home Sales jumped 3.1%, rebounding after the previous release of -4.7%. Later in the day, Japan releases Retail Sales, which is expected to edge up to 1.7%. Thursday promises to be busy on both sides of the pond. The UK releases Current Account and Final GDP, while the US will publish unemployment claims and UoM Consumer Sentiment.

The British economy has performed better than most had expected, with the uncertainty over Britain’s departure from the European Union in March 2019. However, indicators released on Wednesday pointed to some glaring weaknesses in the British economy. The CBI Retail Sales survey has showed sales volumes softening in recent months, and this troubling trend continued in March, with a reading of -8 points. Consumer confidence is also waning, as GfK Consumer Confidence has posted consecutive declines since April 2016. Still, the British pound has enjoyed a solid March, with gains of 2.6% against the US dollar.

The tariff spat between the US and China has shaken up global stock markets and also caused volatility in the currency markets. US President Trump slapped tariffs on Chinese products last week, and China has vowed to retaliate with tariffs on US products. The specter of a global trade war ahs soured investor risk appetite. This week, however, China was singing a more conciliatory tune, saying it would apply to the World Trade Organization to overturn the tariffs. The US has imposed the tariffs under a national security provision, but China has argued that the move is a trade barrier with the intent of protecting domestic producers. Although the dispute has not been resolved, the Chinese move has eased tensions and restored investor risk appetite, in the hope that both the US and China will climb down from their trees and reach some agreement instead of imposing tariffs on each other.

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