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GBP and NZD Climb on UK Retail Sales and New Zealand Election Poll

20 September 2017 by News Desk

Currency experts FC Exchange recap on the British pound and New Zealand dollar's strong performances in Wednesday's trading.

The pound received a boost in Wednesday’s session following the release of better-than-forecast UK retail sales numbers. On the month, August saw a 1.0% increase in sales, despite forecasts for a far more pessimistic 0.1%. This allowed the annual figure to climb to 2.8% from 1.7%, a far better result than the 1.4% economists had expected.

Economist Ben Brettell said: ‘The UK consumer continues to show remarkable resilience, with retail sales in August blowing economists’ forecasts out of the water. Spending has defied expectations of a slowdown since the Brexit referendum, and currently seems to be holding up despite weak wage growth and above-target inflation. 

‘This could bode well for economic growth – the UK economy is heavily reliant on the consumer, and economists had expected falling real incomes to eventually translate into weak retail sales. If this fails to materialise, the economy could see a stronger second half to the year.’

Markets were enthusiastic about the increase in the face of rising inflation, which has been creating a significant squeeze on households. Some industry experts have suggested that the Autumnal weather has brought with it demand for seasonal goods, such as clothing.

Tomorrow will see the release of loans for house purchase, public finances, and public sector net borrowing data which could all have a moderate influence on how the pound trades.

Meanwhile, the New Zealand dollar also enjoyed some extra strength in Wednesday’s session following the release of a political poll which placed the ruling National Party as a clear winner. Any change in government could create extreme Kiwi dollar volatility which it may take some time to recover from.

Disclaimer: This economic update is provided by FC Exchange a Global Reach Group Company, industry leaders in foreign exchange. Authorised affiliates are permitted to reuse content.

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