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April 2016

Pound shrugs off further disappointing macro data

Published: Thursday 21 April 2016

The Pound has shrugged off further disappointing macro data.  This morning UK retail sales fell by -1.3% months on month against the expected -0.1% and year on year 2.7%, expected to be 4.4%. In March, UK Public Sector Net Borrowing figure shrank by £2bn (expected £1bn) to £4.165bn, whilst total borrowing was £74bn, expected £72.2bn.
 
Mr. Osborne has pledged to return the UK to a budget surplus by 2020, with the Office for Budgetary Responsibility forecast predicting that the UK will have a surplus of £10.4bn in 2019-20 and £11bn the year after.  In a hearing after last month's Budget, OBR chairman Robert Chote told MPs there was still a 55% chance that Mr. Osborne would hit his surplus target despite reversing a decision on disability payment cuts.
 
The European Central Bank have held their interest rate at zero with the bank deposit rate also held at -0.4% both as expected.
 
ECB president Mario Draghi has just held a press conference mentioning the following points:  Broad financing conditions have improved as well as repeats that QE purchases will run until at least March 2017. Not only this, 2016 Q1 growth will likely be broadly similar to Q4 2015 so expect recovery to proceed.
 
At the time of writing, the Euro has just strengthened in response to these comments.

Latest FX news by Chris Verdet

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