The pound recorded a four-day slump against the US dollar to touch a record low of 1.3855 . That was happened in the European session on Friday (18/June).
While still struggling with the Fed's hawkish pressures, the GBP/USD faces the release of the latest disappointing UK retail sales data. The UK retail sales report posted -1.4 per cent (Month-over-Month) growth in May 2021.
In fact, the previous consensus predicted a 1.6 percent increase. Core retail sales even recorded -2.1 percent (Month-over-Month), offscoring the estimated 1.5 percent increase.
The Retail Sales are Significantly Corrected
On an annual basis, UK retail sales improved significantly from 42.4% to 24.6%. Similarly, the core retail sales declined from 37.7% to 21.7% (Year-on-Year). That can be seen from the data.
All of which misses the market's expectations, thereby fostering a disreperation with the resilience of consumer spending interests that have been a major motor for the UK's economic recovery and inflation.
Samuel Tombs, a chief UK economist at Pantheon Macroeconomics, said there were some signals that thee UK consumers were starting to display caution again.
He expects household incomes to fall further in the fourth quarter due to a variety of factors. But not all economists agree with Tombs. One of them is James Smith from the ING.
The Customer Confidence may Help
He said that the UK retailers would be helped by increased consumer confidence in the coming months. However, Smith assessed that there is a possibility that consumers will divert their spending.
It is especially to the service industry along with the reopening of hotel, restaurant, pub, etc. The move could reduce the sales of goods, but high consumer spending still has the potential to push GBP back to pre-pandemic levels by the end of the year.
Meanwhile, the The US dollar index (DXY) briefly broke above the threshold of 92.00 in European session trading on Friday (June 18). It is ready to fulfill the most fantastic weekly gain in nine months.
The greenback's rival currencies bowed out in the after-laws of yesterday's fomc statement, which were suddenly hawkish. The newest statement from the FOMC expressed the new facts.
The Possibility of when the Interest Rate May Increase
Most of the Fed officials expect a rate hike to occur in 2023, rather than start in 2024 as previously forecast. This assumption also advances the time forecast for tapering, aka trimming.
In contrast to the FOMC's stance, the European Central Bank (ECB) a week earlier reaffirmed its commitment to maintain its current asset and interest rate buying programme.
In fact, some market participants had hoped the ECB would start tapering this month. The US central bank is one step ahead and the USD result is likely to remain well-held against the EUR.
As no important data will be published today or as early as next week, forex markets are likely to primarily feel the continuing effects of the Fed meeting. That is the biggest possibility so far.
The Inflation Speed Makes the Rolex is Low
The firmness of maintaining a dovish stance was also demonstrated by the Swiss central bank (SNB) in its policy meeting this week. The rate of inflation in Rolex-making countries is likely to remain low for years to come.
That is why; the SNB chose to keep its interest rates at the lowest levels in the world. As the news was written, EUR/USD began to show resistance in the range of 1.1913.
Meanwhile, the USD/CHF continued to rise until it occupied the range of 0.9190s. Elsewhere, the Aussie and Kiwi were also hit by the greenback despite some impressive domestic economic data.
AUD/USD touched a low record since December 2020 in the Asian session this morning, although Australia's unemployment rate fell dramatically. NZD/USD also in a low position since April 2021.
