Currency Exchange Transfer Review 24.01.2011

The Pound declined against the Euro and the Dollar after a weaker-than-expected reading of UK retail sales which suggested sluggish consumer demand and highlighted the fragility of the economic recovery.

Data showed December retail sales were flat on the year, the weakest change since January 2010 and the worst annual performance for any December since records began in 1988. Forecasts had been for a 0.9% rise. Sales fell 0.8% on the month, reversing a rise in November and also coming in lower than economists’ forecasts for a 0.3% decline.

While market participants acknowledge the volatility of the data series, it put a slight damper on speculation the Bank of England may raise rates in May.

The Dollar made gains against the Pound while falling to 2-month lows against the Euro. The euro has gained more than 1% against the dollar since the start of year, driven by growing expectations that euro zone policymakers will arrive at a more durable solution to the peripheral debt crisis and a hawkish ECB, which last week warned about price pressures.

The Euro made gains against the Pound while declining against the Dollar following the expectations of a strengthened euro zone rescue fund and a strong German Ifo business confidence report supported the euro, along with a more hawkish outlook from the European Central Bank recently. Furthermore, Asian sovereign demand and improving confidence in the euro zone is driving the euro higher, though doubts remained whether the euro can hold onto gains.

Currency Exchange Transfer Review 24.01.2011 Data released

EU      10.00 Industrial Orders (November)