Spreadex Market Update

Black Friday boost for UK retail sales lifts sterling ahead of BoE vote



Despite a Black Friday-boosted retail sales reading from November the pound could only manage some mild growth this Thursday, with investors waiting for the latest Bank of England (and ECB) statements.

A month-on-month retail sales increase of 1.1% – and year-on-year jump of 1.6% – was far better than both the 0.4% forecast and the revised 0.5% seen in October. Yet given that most of that growth came from the presence of Black Friday, it doesn’t necessarily tell the whole picture in regards to consumer confidence – not to mention the fact that those post-Thanksgiving discounts may end up dragging December’s sales lower.

Still, it was enough for the pound to push 0.2% higher against the dollar, keeping cable above $1.34 after yesterday’s unanimous Fed rate hike, and up 0.1% against the euro. This, alongside a red-tinged set of banking stocks – also disappointed by the not particularly hawkish tone struck by the Federal Reserve – took the FTSE back below 7500 with a 0.4% decline.

In terms of this afternoon’s updates from the Bank of England and ECB, what they say rather than what they do is the main focus. Just like the pre-known nature of last night’s Fed hike, inaction from the UK and Eurozone central bank’s is effectively guaranteed, meaning any reaction from the pound and euro is going to be dictated by what kind of sentiment they set out for 2018.

As for the US session, the Dow Jones is continuing to be lifted higher by the Republicans’ tax bill progress, with the latest step being an agreement between the GOP’s House and Senate representatives. This, alongside the dollar’s Fed-inspired weakness, has the Dow looking at a 65 point increase after the bell, a rise that would take it to a fresh 24650-crossing all-time high.

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