The Pound has today given up its recent gains following very poor UK retail sales data out this morning.
In May, retailers reported a drop in monthly sales of 0.6%, and in annual sales of 1.6%. Analysts’ expectations had been for an increase of 0.5% for the month and a drop of 0.1% for the year.
The Pound has been rising recently on increasing confidence in the UK economy, with exchange rates against the Euro up 6c in the last month, and around 4c against the US Dollar in the same period.
This morning, both exchange rates have dropped around 1.5c since the figures came out, a worry for anybody who needs to send money abroad.
Today’s data is a stark reminder that the British economy is not yet out of the woods, and particularly that sterling remains susceptible to sudden drops on any negative data releases.
Public borrowing figures, released at the same time, also showed more government debt than expected for May, adding to the damage caused by the sales data.
Against other currencies, rates for sending money to Switzerland, Australia and New Zealand have also dropped.
Friday’s Right Move house price data is the next major UK release, and if recent house price gains are shown to be a one-off rather than a genuine improvement of market conditions, we might expect the Pound to fall back further still. If this is the case, we may have seen the best exchange rates for some time.
