Sterling continues its fine form
14/Φεβ/2014 • Currency Updates•
Sterling continued its fine form yesterday, shooting up nearly a cent against the dollar and managing to hold on to gains made earlier in the week. The pound was boosted by events inside and outside the UK.
Poor retail sales from the US boosted the pound against the dollar, and rhetoric from the UK government on Scottish devolution dispelled some of the uncertainty around the referendum.
Representatives from the three main Westminster parties released a joint statement declaring that Scotland would not be able to use the pound if it seceded, effectively destroying one of the Scottish government’s key economic pillars for an independent Scotland.
Nothing of note out of the UK today
The single currency had a better day yesterday, managing to hold a rampant pound steady, while also taking points off the dollar. Bad US data out yesterday and decent GDP from early this morning contributed to the fortunes of the euro, as it looks to claw back losses suffered earlier in the week.
French and German GDP results for Q4 released this morning, up 0.1% each to 0.3% and 0.4% respectively, boosted hopes of a Eurozone recovery. France’s results were particularly pleasing as the country, often cited as a possible weak link, returned to growth in the last part of 2013 after a turbulent year.
Elsewhere in Europe Enrico Letta, the Italian PM, will today step down from his post as his rival, Matteo Renzi, won a vote of confidence from the Democratic Party. They have pledged to stick with the same coalition, so disruption to law making and practical governance should not be badly effected.
EU wide growth released today is expected to come in at 0.4% YoY, and 0.2% MoM. A reading to the downside will disappointing, particularly after this morning’s decent individual country data.
Another poor data from the US yesterday, hitting record 3 year lows against the pound, whilst also dropping down to levels not seen until the middle of January. It also fell of from the yen for the third day running.
Retail sales, which were expected to be flat in January, actually contracted by 0.4%. Initial jobless claims also rose by 339k, although continuing jobless, a longer term reading, fell off 0.018mln to 2.953mln.
As we mentioned yesterday, the US economic powers will be more and more jittery about US tapering.
Some industrial production figures and import/export price indices will be released today.