Pound v US dollar: GBP exchange rate drops after poor UK sales in March
This is the lowest pound to US dollar rate since 12 April, although it is still better than the monthly low of $1.398.
Demonstrating what an impact the ‘Beast from the East’ had on the UK retail sector in March, month-on-month sales activity has fallen by at least half a per cent.
Additionally, the year-on-year readings either showed slowdowns or stagnation when growth had been expected.
In the longer-term, pound traders will be keeping a close eye on April’s retail sales data to see if the March dip was a weather related one-off or part of a wider negative trend.
On the other side of the pairing, the US dollar has made small advances against the pound and other peers after the Federal Reserve released an upbeat forecast.
The US central bank has suggested that increasing levels of consumer spending and falling unemployment are strengthening the US economy, despite recent concerns.
Such an outlook increases the chances of Fed policymakers committing to a sustained course of interest rate hikes over 2018, as some economists have forecast.
Looking ahead, the pound to US dollar exchange rate could see movement today and tomorrow, when two Bank of England (BoE) officials give speeches.
This afternoon will bring comments from BoE Deputy Governor Sir Jon Cunliffe, followed by Monetary Policy Committee (MPC) member Michael Saunders tomorrow.
There is no guarantee that either will discuss monetary policy, but if plans for the future are mentioned then there could be significant pound volatility.
Traders will mainly be looking for signs that despite the recent panic over slowing inflation rates.
There could still be a UK interest rate increase in May.
(html comment removed: Start of Brightcove iframe Player )If it looks like higher UK interest rates are still on the table for the month ahead, then the pound to US dollar exchange rate could rally.
For USD traders, the next economic data to watch out for will be a pair of speeches from Federal Reserve officials taking place this afternoon and evening.
Fed members Lael Brainard and Loretta Mester will both speak.
As with the BoE officials, if there is any indication of higher US interest rates ahead then the US dollar could appreciate.
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