The unexpected growth of the British pound
The growth of the retail sales volume in the UK increased expectations concerning interest rates growth and thus increased the British currency too. According to the data provided by the Office of National Statistics the retail sales reached the highest level throughout the May increasing monthly by 3.5 percent. Such growth was quite unexpected as the forecasts provided by the experts supposed only stable volume of retail sales (with 4.2 percent annual growth) not growing one (8.1 percent annual growth). Therefore due to UK economist at Royal Bank of Scotland – Ross Walker this has only increased the possibility of interest rates growth.
However the experts say that the Central Bank of the country seems not to pay any attention to the last data even considering the fact that these data turned to be quite unexpected one.
But we should also note that the present data appeared after the comments of the Bank of England Governor concerning the intention of the Bank to take control over the inflation and the fact that the current decrease of the economy will only help the Bank to carry out its tasks.
According to the latest forex trades data the British pound was traded at $1.9714 and the Euro decreased to 0.7861 in relation to pound.
As for the Swiss franc it continued its decline as the Central Bank of the Sweden kept the Libor rate unchanged for the third consecutive month in spite of the fact it will contribute to the increased inflation outlook. Due to Matthew Foster-Smith an analyst at Thomson Reuters IFR Markets it was expected that the Central Bank will act in such way however there was an opinion of possible change of its’ policy and increase of the interest rates by 25 bp.
Moreover, as there is no more new data to be issued in the Europe the attention will be paid to US and its forthcoming unemployment report and Philadelphia Fed survey of manufacturing conditions. Due to forecasts the jobless claims will decrease to the point of 375,000 from the last week’s 384,000. On the other hand the number of individuals applying claims for unemployment will probably increase to 3.150 million.
And finally the Philadelphia Fed survey will possibly increase to –10.0 point throughout the June.
