Worse-than-forecast retail sales showed that sales contracted further than expected in December, sliding by -1.3 per cent over the month, if fuel is stripped out. Following the release of this data the pound US dollar exchange rate fell by 0.3 per cent, although Sterling was already on the back foot this morning. Yesterday afternoon saw the release of the US initial jobless claims, which revealed an unexpected drop despite forecasts suggesting claims would increase due to the partial US government shutdown. It is being reported that the number of federal workers who are seeking unemployment benefits has doubled in the last week, with the number of furloughed workers reaching 10,000.
Despite this, it appears that the US job market remains relatively healthy.
The pound rose over the course of the session yesterday as Theresa May survived a vote of no-confidence trigged by Labour leader, Jeremy Corbyn.
At the same time, the US dollar was strengthened following the release of the latest Philadelphia Fed Manufacturing Index.
This showed a surprising uptick to 17, from the previous month’s 9.1.
The fact that US manufacturing seems to be holding up while declines are seen in the eurozone and Japan should possibly have lent more support to the US dollar.
Although at the end of the day US dollar did not manage to hold up against pound as the latter benefitted from positive Brexit sentiment.
Later this afternoon will see the release of the US industrial production figures for December.
Forecasts are suggesting that growth will have slowed, which may see the pound US dollar exchange rate fall at the end of this week’s session.