Friday, 27 March 2009 01:51

Sterling falls
Sterling fell against the dollar and euro on Thursday after data showed UK retail sales were much weaker than expected in February.

"We saw a weakening on the back of the retail sales and the market is focused on the macro-economic deterioration and the fact the Bank of England is doing everything it can to support the economy," said Phyllis Papadavid, a currency strategist at Societe Generale.

Today we have GDP figures, which will probably affect Sterlings value one way or the other.

Elsewhere, news yesterday confirmed the New Zealand economy shrank at its fastest rate in 17 years in the last three months of 2008. Its gross domestic product (GDP) fell by 0.9%, the most since 1992, led by a drop in manufacturing, according to Statistics New Zealand. GDP shrank in all four quarters of 2008. The International Monetary Fund expects a further 2% decline in 2009.

However Sterlings decline yesterday cancelled out the Kiwi dollars decline, so we saw no rise in the exchange rate.

Japan
Retail sales in Japan saw their biggest fall in seven years in February, adding to fears of a deepening recession.The figure is more than twice January"s year-on-year decline of 2.4% and is the sixth monthly decline in a row. The figures were the latest in a stream of grim statistics charting Japan"s economic woes. Economic Minister Kaoru Yosano has said Japan is facing its worst economic crisis since the end of World War II.

Todays UK Data
This morning we have UK Nationwide House Price data, which gives a good insight into the housing market in the UK. As this is so linked in with mortgage lending, it can have an impact on Sterling. More importantly, we have UK GDP figures released at 09:30.

What is GDP? It is a measure of the total value of all goods and services produced by the UK. The GDP is considered as a broad measure of the UK economic activity and health. It is the measure that confirmed we are in recession. Figures are expected to show the econonmy srank by 1.5% compared to the last quarter, and 1.9% decline year on year. If figures are any different, expect Sterling exchange rates to be affected.

Todays US Data
The most important release today is the Core Personal Consumption Expenditure, which is an average amount of money that consumers spend in a month. It is a significant indicator of inflation so can have a big impact on Sterling Dollar exchange rates.

Enjoy your weekend.

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