Sterling boosted by rise in UK retail sales

Published: 18 November, 2011

Sterling strengthened yesterday after stronger than expected retail sales figures provided positive news on the UK economy.

Currency rates - November 18

EURO/GBP - 1.1697
US$/GBP - 1.5767
CHF/GBP - 1.4492
CAN$/GBP - 1.6248
AUS$/GBP - 1.5830
ZAR/GBP - 12.9680
JPY/GBP - 121.21
HKD/GBP - 12.2906
NZD/GBP - 2.0767
SEK/GBP - 10.7210
AED/GBP - 5.796
US$/EURO - 1.3501

Figures showed that retail sales increased by 0.6% in October - beating expectations for a fall. Despite this rare piece of good news, many analysts feel there are still significant risks facing the UK economy - especially heading into the new year when growth can stall after Christmas. Sterling should however remain supported against the euro given the concerns over risks of contagion in the euro zone.

The European debt crisis was close to claiming its 3rd victim in as many weeks. Spain's borrowing costs jumped yesterday, with the country having to pay 6.975% on new borrowing yesterday three days ahead of an election that is expected to see the ruling socialist party toppled. Bond yields in many other countries in the region also suffered with many analysts predicting that markets are now pricing in a break up of the euro zone.

In the USA, stock markets fell for another day on Thursday as fears over the euro zone crisis causing a global liquidity crisis negated recent positive data showing a seven month low for new jobless claims and an increase in permits for new homes. Many had felt that these positive signs were a sign that the US recovery was under way, but the gathering storm in Europe is a worrying sign for the global recovery.

Elsewhere, the Japanese yen strengthened to a two-and-a-half week high against the US dollar as concern over the euro zone saw investors seek refuge in the safe haven currency. This was the lowest level since the Japanese intervention of October 31st.

Supplied by Nick Ryder of Smart Currency Exchange, the currency partner to Harpers Wine and Spirit who have teamed up with Smart to provide readers with a free bespoke currency service. Go to www.smartcurrencybusiness.com/winespirit for more information or call on 0207 898 0500.

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