Market Report - 17/02/23
UK Retail sales resilient, Euro remains strong following decline in European gas prices
Retail sales across the UK were stronger than expected in January, as consumers kept spending despite the cost of living crisis. But, people kept cutting back on buying food, due to the surge in costs.
The Office for National Statistics has reported this morning that retail sales volumes rose by 0.5% in January 2023 as shopping picked up after a 1.2% drop the previous month. However on an annual basis, retail sales volumes were down by 5.7% in the three months to January 2023, as the cost of living crisis meant people could afford to buy less.
In the FX markets, the pound is trading at its lowest level against the US dollar in six weeks. Sterling dropped to $1.1913 this morning (the lowest level since 6th January) despite hopes of a breakthrough in the Northern Ireland protocol.
GBP/USD has extended its slide toward 1.1900 heading into the American-session amid the negative shift witnessed in risk sentiment on Friday. Although the data from the UK showed that retail sales rose by 0.5% in January, it failed to help the pair gain traction.
GBP/EUR was also down on the day, mainly due to poor sentiment surrounding the pound and the fact that natural gas market developments are seen to be particularly supportive of the euro, thanks to an ongoing decline in prices.
EUR/USD stays under bearish pressure and continues to push lower towards 1.0600, trading at its lowest level in six weeks. The pair is undermined by a broadly firmer USD amid rallying US Treasury bond yields and risk aversion. Looking ahead, ECB and Federal Reserve members are due to speak, which is likely to give fresh impetus into the levels we could expect on this pair.
With the above in mind, if you have any immediate requirements that need quoting, or if you would like further information, please feel free to reach out.