The British pound was at the whim of the US dollar and Euro today with the CBI Distributive trades survey failing to motivate any meaningful action in the currency. Last month, retail sales were very strong, but next month, consumer spending could falter.
Even though the CBI retail sales index was less negative than the last two months, sales expected for the month of July plummeted. In other words, retailers do not believe that the strong pace of growth reported last month can be repeated next month. Like the US dollar, the pound has fallen victim to the prospect of higher interest rates in the Eurozone and stagnant rates in the UK. Although inflation is more than a full percentage point above the Bank of England’s 2 percent target, the lack of definitive strategy on interest rates is hurting the British pound.