Spreadex Market Update

Retail sales send pound higher ahead of potentially hawkish BoE



With investors awaiting both the Bank of England’s latest rate vote and the unveiling of Trump’s tariffs on Chinese imports the markets remained in a bloody mood this Thursday.

Following a far better than forecast retail sales figure for February, coming in at 0.8% against the 0.4% forecast, the pound just about managed to build on Wednesday’s gains. Against the dollar it’s up 0.1%, lifting cable to a near 7 week high of $1.415, while against the euro it rose 0.2%, with sterling hitting a €1.15-teasing 2 month peak against the single currency. Those gains will likely only increase if Mark Carney uses March’s BoE meeting to further tee up a May rate hike.

As for the FTSE, the pound’s growth, combined with the fearful nature of trading elsewhere, dragged the index down by nearly 50 points, leaving it at its worst price since the chaotic intraday trading of early February. Things were even worse in the Eurozone, were a string of disappointing flash manufacturing and services PMIs helped send the DAX and CAC 1.1% lower apiece.

A large part of the European situation is being informed by an impending 150 point drop from the Dow Jones, a move that would take the index back below 24550. Though not hawkish enough for some, the Fed nevertheless did raise rates last night AND warn of the impact of a trade war, both things that are undermining the Dow this Thursday. And god knows what the index will do if Trump goes all-in with his China tariffs later today.

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