By Luke Dyson
Following on from last week’s trading, we saw sterling gain some further traction against the euro, now making a relatively strong recovery towards pre Trump tariff levels.
On Friday we saw UK retail sales come back better than expected , with a reading of 0.4% significantly better than the forecasted -0.4%, in turn boosting sterling’s strength further.
However will these gains last much longer? On Friday, GFK released their consumer confidence index and it shows sentiment has fallen to the lowest level since November 2023. Now down to -23 , this is because the population have been battling higher costs for utilities , council tax , stamp duty and road tax. But also GFK director Neil Bellamy stated he is hearing warnings of renewed higher inflation off the back of Trump’s tariffs.
He believes the retail sale figures on Friday should have pushed sterling even higher than the actual outcome, and this is because of the deteriorating domestic sentiment making sterling underpriced.
Data wise this week for sterling it’s a relatively quiet one , however for the Eurozone we have GDP at 10:00 Wednesday 30th but also at 10:00 on Friday 2nd we have consumer price index (inflation). Both of these have significant power to move the markets depending on the results.
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At present, sterling is performing reasonably well and is still a good buying opportunity for sterling to Euro. However this could be short lived given the general population’s finances are slowly deteriorating. So don’t wait in the hope that rates will improve further, without understanding the risk should the market move back the wrong way.