Published On: Thu, Apr 18th, 2019

Pound US dollar exchange rate: GBP muted despite surging UK retail sales | City & Business | Finance

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This is despite UK retail sales smashing expectations and rising by a 6.7 per cent in March, on an annual basis. The Office for National Statistics (ONS) said the surge in spending was thanks to an increase of sales at food stores and non-store retailing such as internet sites. Many stores reported that the increase of spring spending this year came from milder weather, compared to a year ago when the ‘Beast from the East’ struck. The ONS also found that department stores were the only store type to lose sales when compared to March 2018, as sales fell 0.3 per cent in 2019. 

Commenting on the data, Head of Retail Sales at the ONS, Rhian Murphy said: “March’s mild weather boosted sales, with food shops also recovering after a weak February.

“Over the longer term, department stores were the only shop type to see their sales shrink.”

Meanwhile, in a speech on Wednesday, the US Federal Reserve’s James Bullard said he was pleased with the Fed’s current stance of signalling no rate hikes in the coming year. 

Mr Bullard said that he is watching inflation closely.

He said: “The Fed came down and adopted my suggested policy of a flat rate outlook so I think all of that is combining to keep us on an even keel.”

While the Fed is reviewing its monetary tools and communications practices in 2019, Mr Bullard stated that he expects the US economy to grow at an annual rate of 2 per cent during Q2 2019.

He said: “Overall, the outlook is still looking very stable for the US economy. I expect better news to come in as we go through the second quarter.”

However, this could do little to buoy the US dollar as investors pulled out of the safe-haven currency following a rise in investors’ risk appetite.

Looking ahead to this afternoon, the US dollar could rise against the pound following the release of the latest US retail sales figures. 

If retail sales rise, offsetting last month’s contraction, the greenback could receive an upswing of support. 

However, the dollar could slide back again following the release of the preliminary US Markit PMI composite.

If April’s PMI shows that the rate of manufacturing growth is slowing, sentiment in the US dollar could be hit. 

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