A slightly better than expected sales report will offer some short-term relief to Sterling.
Sterling struggled against the dollar for much of Wednesday, although it did push towards 1.97 in New York. The UK currency substantially underperformed the Euro and weakened to lows beyond 0.8030 before a slight corrective recovery.
The overall MPC stance will offer some near-term support to the UK currency as it will reinforce yield support. The latest government borrowing data was also better than expected which will offer some near-term relief, but there will still be major fears over the economy as recession fears are liable to increase. Dollar weakness kept Sterling above the 1.97 level against the US currency on Thursday while there was some recovery against the Euro.
UK retail sales volume fell 0.2% in April after a revised 0.2% decline the previous month. The drop was, however, less than expected and the March data was revised up slightly. The evidence still shows a clear slowing in spending, but the data will ease immediate fears to some extent and provide some cushion to the UK currency in the near term. Sterling recovered some ground against the Euro following the sales data with a move to 0.7970 against the Euro.
The latest CBI industrial survey also recorded an improvement to -10 in May from -13 the previous month as the prices component remained robust