Sterling’s decline has continued in early trading this morning as retail sales missed expectation.

Sterling’s decline has continued in early trading this morning, retail sales missed expectation (+0.2%) coming in at -2.5%. This compounds a tough week for sterling that’s lost 2% of its value this week, and looks set to test its support of 1.36. On a more positive note, for the pound, public sector net borrowing fell in July, the government have reported that they borrowed £10.4bn (£10.1bn less that the same month last year).

Fears remain the current situation in the middle east could escalate, press and public disapproval is growing in the West, most notably the US. Pressure is mounting on president to take. Though it seems counterintuitive, war is perceived to be good for the dollar. ‘Defense’ spending would increase as would increase along with demand for oil. Should Biden deploy troops this could further strengthen the dollar’s strong run.

Goldman Sachs yesterday lowered their forecast for US economic growth, they have cited a greater than anticipated impact of the COVID-19 delta variant that is hindering supply chains and elevating inflation. The bank now expects the economy to grow by 6% from a previously forecast 6.4%. They have also predicted that that consumer spending in august will drop by 1% following poor figures released for July showing the fragility of the recovery.

Economic Calendar

12:01GBP Gfk Consumer Confidence-7-7
12:05AUD RBA Assist Gov Kent Speaks
12:30JPY National Core CPI (Y/Y)-0.4%0.2%
19:00EUR German PPI (M/M)0.8%1.3%
19:00GBP Retail Sales (M/M)0.2%0.2%
19:00GBP Public Sector Net Borrowing10.8B20.7B

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.