UK retail sales slow in February – rainy days blamed

Sterling had the shine taken off it this morning when data from the British Retail Consortium showed just 1% growth in the year to February. That was down from 1.4% in the previous month. The BRC blamed rubbish weather in February which kept shoppers away from the high streets. The pound only dropped a quarter of a cent against the US dollar ($1.2680 this morning) and is barely unchanged against the euro. GBP/EUR is sitting in a flat trading pattern at €1.1690 right now. That €1.17 level is still proving a tough nut to crack. We will get a slew of purchasing managers indices today from the UK, EU and US as well as a number of individual ones from European states. However, traders are likely to be reticent until they see tomorrow’s eurozone retail sales data, which is forecast to be very bad indeed, and the budget from the UK chancellor of the exchequer. In case you hadn’t noticed, a UK election is looming, so as with every chancellor before him who faced an election battering, Jeremy Hunt is likely to splash some cash to entice voters. What that will do to the value of the pound is a moot point at this stage.

AUD weaker ahead of GDP numbers

Overnight tonight, we will see Australia’s gross domestic product data (GDP) for the fourth quarter of 2023. If the forecasters have done their sums correctly, that will reflect 1.5% growth in the year to December, significantly down on the 2.1% growth we saw in the previous quarter. At a time when the Reserve Bank of Australia is trying to determine if and when it might start cutting interest rates, although some members of the RBA have been talking about further interest rate hikes, this is the kind of data that might accelerate their rate-cutting plans. Just to complicate the issue, there are also forecasts out there that suggest the February retail sales in Australia bounced back by 1% or just above. Right now, the GBP/AUD exchange rate is slightly down from the overnight highs at AUD 1.9545. As well as this Aussie data, tomorrow’s UK budget will have an impact on this pair.