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Views Article – Sharenet Wealth

Europe, Forex

Sterling recovers, with retail sales in focus

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv

LONDON, July 18 (Reuters) – The British pound rose on Thursday as traders betting against the currency took some profits after it plunged this week amid jitters about the threat of a no-deal Brexit.

Retail sales data for June will be released at 0830 GMT, helping traders assess the state of the British economy. Several economists have predicted it shrank in the second quarter.

A Reuters poll of economists forecasts a month-on-month retail sales contraction of -0.3%, against -0.5% the previous month.

Sterling dropped this week after the two candidates to replace Prime Minister Theresa May appeared to push for a no-deal Brexit if they cannot renegotiate a proposed withdrawal agreement with the European Union.

“Whist GBP’s recent underperformance is mostly related to a rising political risk premium, weak economic data have also played their part (our UK economic surprise index has swung from strongly positive to strongly negative, -50 currently, over the last couple of weeks),” said Adam Cole, strategist at RBC Capital Markets.

The pound rose 0.3% to $1.2464, away from the 27-month low of $1.2382 hit on Wednesday. Against the euro, sterling recovered 0.1% to 90.17 pence. It had hit a six-month low of 90.51 pence on Wednesday.

Britain is due to leave the EU on Oct. 31, and traders worry the UK could end up leaving without trading arrangements with the bloc in place. That would hit the British economy, which is already struggling because of the political uncertainty around Brexit, economists say. (Reporting by Tommy Wilkes, editing by Larry King)


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