Sterling down on negative retail sales report – Dollar up on rising risk aversion
Sterling down on negative retail sales report – Dollar up on rising risk aversion
12-18-2009 07:06
The Pound Sterling dropped today against a number of currencies on the back of pessimistic retail sales figures, indicating that the UK economy still struggles, shifting attractiveness out of the UK.The Greenback rose this Thursday against the Single Currency and particularly versus more-profitable currencies due to rising concerns regarding Greece’s debt situation, which increases demand for safety and favors the US Dollar and the Japanese Yen, which posted the best results in the Forex market today.
Pound Sterling
After the Office for National Statistics released the first contraction in UK retail sales in half a year, the Sterling reached the lowest rate in two months against the Greenback. The negative report indicates that the economic improvement will need more time than forecasted, bringing the Sterling down against the US Dollar and the Japanese Yen, which profited from a risk aversion sentiment this Thursday due to speculations that Greece may struggle to pay its debts. Europe’s Common Currency was one of the few currencies that failed to gain against the Pound, while EU member Greece, impacted the prospects for the Euro significantly negatively.UK retail sales
If retail sales alter considerably and do not essentially point to serious problems for the UK economy, the negative figures ended a series of optimistic data and forced the Sterling down while risk aversion dominated today’s trading session, according to currency analysts.Greenback Dollar
The Greenback climbed against the majority of the 16 most popular currencies due to Standard and Poor’s providing Greece, an EU member, for the second time this year a credit downgrade, creating risk aversion and thus providing the Greenback and the Japanese Yen mostly support. The Sterling dropped considerably against the Greenback, touching the lowest level in two months as a result of negative UK retail sales, ending last month’s positive sentiment.Concerns about more problems
It may be difficult for the Common European Currency to maintain its strength against the US Dollar as a number of EU countries continue to struggle.John Ross Crooks, Director of Research at Black Swan Capital, commented: “Obviously there are concerns about more problems that could slow down the economic improvement in the 16-nation euro area.”
In this situation, the Greenback could gain particularly against the Single Currency in the near term, and rates below $1.40 may be reality, analysts stated.
