Sterling fell sharply from recent highs against the euro at the end of last week, and to the lowest level against the US dollar since the spring.
The obvious cause was a lower-than-expected result for Retail Sales in the UK. They rose by just 0.2% in November, when 0.5% had been expected. It was at least a bounce back from the 0.7% drop in the previous month.
The pound was also dragged down by the FTSE, which had its biggest one-week drop of the year following fears over a US government shut down. That risk fell away after the US Senate approved a stop-gap funding measure to avert it.
The other main events of last week were the interest rate decisions from the Bank of England (BoE) and the US Federal Reserve. The latter cut by 0.25% while the BoE kept rates at 4.75%. Prior to that decision GBP/EUR had climbed to an eight-year high, but the vote by three members of the panel to cut rates sent it spiralling downwards afterwards.
Inflation was revealed to have climbed to 2.6%, the second rise in successive months, but less than the market had predicted. In the US, on the other hand, the Core PCE index measure fell to its lowest in six months.
So, what of this week? We have just heard that Gross Domestic Product (GDP) in the UK was even lower than the 0.1% for the quarter previously reported – there was zero growth.
One positive side of the economy is shopping centres, according to a new report from shopping centre operator Landsec. It said that sales are now comfortably above pre-pandemic levels – as much as 20% above – in its malls which include seven of the top 30 in the country, such as Liverpool One, Bluewater and Trinity Leeds.
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