Sterling climbed close to its best level for over two weeks against the euro in early trading this morning as GBP/EUR continues a slow but unsteady recovery from the precipitate falls at the start of the month.
It is being buffeted by a set of downbeat consumer and business confidence readings. Yesterday the CBI’s business confidence index showed continuing pessimism in the UK’s manufacturing sector amidst lower demand from both home and abroad.
Overnight we had the view from consumers, and this was also negative. The GfK Consumer Confidence Index fell to minus 25 in April, it’s lowest for 18 months.
However, we have just had a reading for UK retail sales for March, and while they declined from the previous month, there was still growth of 0.4% which was above expectations.
There was little movement for sterling against the US dollar, but GBP/USD remains close to its best for three years and 6.5% stronger than this time last year.
In business news, the Chinese government said that trade talks with the US would only start if all tariffs were removed first. They appear to be calling President Trump’s bluff, as the US side has suggested that talks had already progressed. ‘Fake news’, said China’s spokesperson.
The UK chancellor Rachel Reeves is in Washington DC and both she and Bank of England governor Andrew Bailey said yesterday that they “understood” the issues that Trump is attempting to address with tariffs – the great imbalance of global trade with China. Reeves said she was “working flat out” to achieve a trade deal with the US.
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