The outlook for the UK’s economy has soured for investors and, as a result, the Pound Sterling has been under some pressure and recently recorded the largest 4-day fall in nearly two months versus the US Dollar. The GBP/USD weakened 1.4% during the last four trading sessions and the outlook remains uncertain. Today, however, the Pound managed to steady itself despite unexpectedly disappointing retail sales figures which suggests to analysts that UK consumers are budgeting themselves and preparing for the possibility of higher food prices. The rocky start to the Brexit negotiations also appears to be weighing on the UK economy.
As reported at 11:13 am (BST) in London, the GBP/USD was trading at $1.30, down 0.01% and off the session low of $1.30280 while the peak is set at $1.30544. The EUR/GBP is up 0.32% and trading at 0.9059 Pence; the pair has ranged from a session trough of 0.90446 Pence to a peak of 0.90648 Pence.
Central Bank Divergence Helping Euro
Analysts point out that the EUR/GBP is strengthening in large part due to the growing signs of divergence between the respective central banks. The Bank of England had voted to maintain interest rates, with 6-2 in favor of the status quo, against a previous 5-3 vote. Downward growth and inflation predictions have also weighed on sentiment for the BOE. Meanwhile, at the European Central Bank, Mario Draghi is poised to reconsider its QE program, especially now with low unemployment and a rise in core inflation which hit a 4-year peak last month.