Pound ignore reports weaker than expected Retail Sales yesterday and continued to appreciate against most of the majors as a reaction to Wednesday 's hawkish Bank of England Quarterly Inflation Report. Office for National Statistics reported that retail sales dropped -0.7 % in October, compared with the month's forecast of stagnation. The ONS said that the fall / winter clothing sales were affected by unseasonably warm weather, while analysts commented that UK households will not be able to keep the current level of
consumer spending due to rising inflation and the rate of wage growth softness at this time.
EURO
The euro was down about half a percent against the euro yesterday as the euro zone growth came at 0.1 % for the third quarter, down from 0.3 % in Q2. Soft GDP figures supported by depressed growth in Germany only 0.3 % and a quarterly contraction of -0.1 % in the second biggest economy in the region, France.
With growth prospects across the 17-nation bloc seemed pretty dim, falling consumer price threatens to bring about nasty deflationary spiral and the European Central Bank sounded more dovish than previously, this does not look good for the single currency at the moment. With the Federal Reserve's bond-buying program is set to expire at some point in the horizon, the Euro may lose some of the pseudo - safe haven and this could lead to stronger Sterling against the Euro exchange rate.
U.S. Dollar
The pound strengthened against the U.S. dollar by about half a percent yesterday as the incoming Chairman of the
Federal Reserve Janet Yellen expressed a desire to maintain the monetary stimulus in place to help the U.S. economy is improving. Yellen said that it was " essential " that the U.S. labor market is improving, and mentions that the term unemployment can have an adverse affect on marriage and social cohesion, as well as on the economy. Soon - to-be president of the Fed said that positive month $ 85000000000 scheme currently outweigh the negatives, which hurt the ' greenback ' as it looks to reduce the possibility of QE3 which wound down quickly under his rule.
In other economic news reported that U.S. initial jobless claims fell by -2,000 last week, with an index print on 339 000. The results are most compatible with what the market had anticipated, and therefore have a limited impact on the dollar. A - $ 2800000000 widening U.S. trade balance to - $ 41800000000 have a more negative impact on the U.S. currency.
