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GBP drops on retail sales fall

Published: Friday 20 July 2018

  • Sterling sinks on shopping slump
  • Organization of the Petroleum Exporting Countries (OPEC) to ‘agree’ oil production
  • Canadian Dollar awaits Consumer Price Index and retail sales data
​​By David Johnson

Sterling sinks on shopping slump
Sterling took a battering yesterday after UK retail sales contracted much more sharply than anyone had predicted. Maybe it is just too hot to go shopping but the high streets had a rough time of it in June. The Pound starts the day around €1.12 and $1.30, just above the support levels that chartists love to draw on graphs. (I include myself in that. It is my geek thing). The politics is the only thing to trouble sterling traders today and, as we all know, there is no shortage of that.  
Macho libre
There is an Organization of the Petroleum Exporting Countries (OPEC) meeting today. The oil producing cartel is struggling to agree on production numbers but with crude oil prices significantly elevated, they may seek to elevate production in order to stabilise things a little. But, as I said, agreement between these macho states is hard to come by.
Bets are on for Canadian Dollar
Canadian inflation data should show a slowdown and that makes it hard for the Bank of Canada to justify further interest rate hikes. They moved the base rate up to 1.5% at their last meeting and that’s the highest since 2008. So the Canadian Dollar would be prone to weakening after the data release, except the retail sales data, also due for release today, is likely to chow a healthy bounce back from last month’s contraction. So no one knows what the CAD will do right now. Watch this space…
Pub… or panic?
That is about all the data we have today. The US market is quiet and so is the EU, so traders will either head for the pub or react like startled blackbirds over anything coming from Downing Street. So it could be interesting.
The name’s Johnson, David Johnson
And finally, does anyone have £340,000 they would like to donate to my childhood fantasy fund? Selfridges put on a display yesterday of a jet suit that can propel a human being above ground level to hover and zoom around and the like and they are on sale for the aforementioned amount of cash. Now I know we all want one, but I asked first, OK?  
Water way to live​
A man goes to the doctor, worried about his wife's temper. He says, “Doctor, I don’t know what to do. Every day my wife seems to lose her temper for no reason. It scares me.”
The doctor says, “I have a cure for that. When it seems that your wife is getting angry, just take a glass of water and start swishing it in your mouth. Just swish and swish but don’t swallow it until she either leaves the room or calms down.”
Two weeks later, the man comes back to the doctor looking fresh and reborn. He says, “Doctor, that was a brilliant idea! Every time my wife started losing it, I swished with water.
I swished and swished, and she calmed right down! How does a glass of water do that?”
The doctor says, “The water itself does nothing, but it does ensure you keep your mouth shut.”

Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR 09:00 EU: Current Account 28.4b 27.2b
GBP 09:30 UK: Public Sector Net Borrowing 3.4b 3.6b
CAD 13:30 Canada: Consumer Price Index 0.1% 0.1%
CAD 13:30 Canada: Core Consumer Price Index -0.1% -0.1%
CAD 13:30 Canada: Retail Sales -1.2% 1.0%
CAD 13:30 Canada: Core Retail Sales -0.1% 0.6%

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