The Single currency got a shot in the arm yesterday, but it had nothing to do with anything that happened in Brussels. Over in the United States, the figures for retail sales for the month of April came in lower than expected on all metrics (retail sales and retail sales less autoes). This has placed doubt on economic growth expectations in the US after a less-than-stellar first quarter, the outcome of which had been attributed to bad weather and other “transitory” factors by the Federal Reserve and market commentators.
The expectations for the first in a series of core interest rate rises, which directly affects the strength of the dollar, have now been well and truly priced out of the currency until after the start of 2016, at the earliest.
Bank of England cautious on growth forecasts
The Bank of England released its quarterly inflation report yesterday and used the occasion to dampen expectations of growth in Britain. Coming on the back of a relatively decisive outcome in the recent General Election there, this statement did nothing to weaken the pound sterling, especially in light of the disappointing retail sales from the US.
The BoE is now letting it be known that it will not be raising interest rates in the next twelve months, if even then.