The British pound moved sharply lower vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.4535 level and was capped around the US$ 1.4825 level. Cable was lower for the third consecutive day as traders reacted to very weak U.K. economic data. First, BRC reported U.K. retail sales registered their worst record on performance in December, the latest indication that final private demand remains weak. Second, the government reported November house prices were off 8.6% y/y. Third, November U.K. exports fell 6% despite the recent fall in sterling. Fourth, RICS December house sales reached a record low and the proportion of unsold houses rose to its highest level since 1992. Fifth, BCC reported its quarterly survey of nearly 6,000 firms evidenced a frightening deterioration in late Q4 business activity. Most traders expected Bank of England to continue easing monetary policy in Q1. The Brown government is expected to announce new measures to provide financing assistance to small and medium-sized businesses. Cable bids are cited around the US$ 1.3920 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.9120 level and was supported around the ₤0.8980 level.
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