Sterling was on the rise yesterday after the Bank of England (BoE) held interest rates and President Trump backed away from any immediate involvement in the Israel-Iran conflict.
The pound strengthened against just about all currencies yesterday, but that has all been thrown into reverse by the steepest monthly decline in retail sales for 18 months, just announced by the Office for National Statistics (ONS). According to retailers, sales in May were hit by good weather earlier in the spring enabling people to buy summer clothes, improve gardens and homes earlier in April. May’s decline certainly wasn’t reflected in the GfK Consumer Confidence reading, which improved for the second month in a row.
The big stories of yesterday started with the BoE holding rates at 4.25%, as expected. However, three of the nine-member Monetary Policy Committee had voted for an immediate cut, pointing to the next cut coming at its next meeting on 7 August. That will be a relief to many as UK credit card borrowing costs hit a 19-year high.
President Trump was in puckish mode yesterday, saying maybe he will and maybe he won’t commit US forces against Iran. This was seen as a softening of the position after he warned Tehran residents to flee earlier in the week, and saw the dollar weaken as risk appetite increased.
In more currency news, yesterday President Macron called for the European Central Bank (ECB) to bolster the euro’s position as a global reserve currency.
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