The British like-for-like retail sales figures for December were released in the early hours of this morning showing a further-than-expected fall to -0.7 per cent in the run-up to the festive season. Retailers suffered their worst Christmas in 10 years, which some commentators claim to be further signs of an economic slowdown ahead of the UK’s departure from the European Union in March. The British Retail Consortium (BRC) noted that despite retailers slashing prices, stores have not been able to encourage shoppers to spend more. In contrast to this, retail sales figures for Italy have showed that in November sales increased by 0.7 per cent.
Bank of England (BoE) Governor, Mark Carney gave a speech yesterday afternoon, in which he reiterated the bank’s steady approach to monetary policy, stating: “Any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent.”
Mr. Carney also said the BoE was ready for whatever the economy may bring in 2019, stating: “From a monetary policy perspective, the Monetary Policy Committee is well-prepared for whichever path the economy takes.
“We have the tools we need. We will be prudent not passive.”
The pound suffered losses yesterday when Theresa May failed to win over the support of the Democratic Unionist Party (DUP) for her Brexit deal, resulting in the Northern Ireland party calling her proposals over the backstop “meaningless”.
At the same time, the euro was buoyed by the release of November’s unemployment rate, which fell to a 10-year low of 7.9 per cent.
The European Central Bank (ECB) Monetary Policy Meeting Accounts are to be released today, which will give investors a clue as to whether the central bank is going to start tightening rates this year, potentially pushing the pound euro exchange rate lower if they do.
Tomorrow will see the release of the UK’s GDP figures for November, which are forecast to remain steady at 0.1 per cent, although if the figure show a surprise increase it seems likely that the pound euro exchange rate will climb.