Sterling hits one-month low against the Euro
The Pound Sterling hit a one-month low against the Euro today on the back of retail sales data which showed an unexpected decline. Analysts had originally expected the report to show an increase in retail sales by 0.1 percent, increasing the impact of the 1.6 percent decline. The fall made it two consecutive months of declines for retailers who saw sales drop by 0.6 percent in March, after an impressive rise of 2.6 percent in February.
The news will also have been a bitter blow to opponents of Bank of England governor Mervyn King’s quantitative easing policy. The minutes for the BOE’s May meeting were released today, containing confirmation that the governor was denied the right to press on with his plans to expand the nation’s current £375bn QE program to £400bn.
With Mervyn King’s recommendation growing stronger, it seems increasingly likely that the central bank will finally agree to the additional £25bn being added to the program in the month that the governor will step down after a decade long tenure. This naturally lead to a decline in the strength of the UK’s currency.
The sterling peaked against the Euro just before 7am at 1.1739 before pausing for the to open and nose diving to 1.1659, a month long low. The pound also declined against the greenback, despite talk of monetary easing also taking center stage across the Atlantic. Similar trends were seen in the GBP/USD pair, with the sterling hitting a low of 1.5075. At the time of writing the pound had clawed itself back to 1.5101, down 0.33 percent against the dollar for the day.
The slight rise came after the International Monetary Fund released its opinion on the current state of the UK economy. The IMF encouraged the UK to keep further their economic policies, encouraging encouraging growth, while remaining “accommodative”.