Post date: 29/03/2018 17:00
Due to this weeks relative inactivity both politically and economically in the UK and the Eurozone, the pound has traded mainly sideways. The pound has however, dropped nearly 2% against the USD as the US continued to post positive economic data.
The transition deal for Brexit has been finalised and agreed on. As a result, the UK will remain in the Customs Union and Single Market until the end of 2020. This should help the pound regain it’s positions against all currencies since the referendum. Last week the Bank of England held its Interest rate decision, but 2 members did vote for a hike. A large portion of the market say this should pave the way for a May hike.
As a consequence of the UKs poor economic performance recently, big retailers such as Bargain Booze, Maplin, and Toys R Us are going into administration. Additionally, Mothercare, Carpetright, Moss Bros and even Next and John Lewis are struggling to keep the tills from ringing. Jobs are now at risk, and rising costs from the national living wage, apprenticeship levy, business rates and inflation, combined with consumer spending pressures and the rise of online shopping, is hitting retailers where it hurts the most.
Very little to talk about within the Eurozone this week. The continent has been impressing the world with its positive economic data and growth in 2017 and the start of this year. More and more talks of ending their QE programme by September this year has now been called into question as new economic data suggests that their GDP has peaked. Perhaps the hype arounds the EUs performance is finally coming to an end. As a result of this, they could face some negatives which could hopefully boost the GBP/EUR. On Thursday morning Germany posted positive unemployment figures and beat expectations, but this didn’t have much of an effect on the market.
The USD has strengthened significantly this week due to a series of positive economic data releases. This included an increase in GDP figures and Pending Home Sales data beating expectations on Wednesday. On Thursday afternoon Personal Consumption Expenditures beat expectations both month on month and year on year. Subsequently, Continuing Jobless Claims and Initial Jobless Claims both beat expectations as well, causing a strong USD again. Apart from this the USD was impacted by further tariffs levied on China to the effect of $60bn. Additionally controversy surrounding the allegations made against Russia of a cyber-attack on US power grid impacted the USD as well.