Australia’s worst retail sales data in four years
Early in the week we saw some quite poor economic data from down under. Retail sales data which was predicted to come in at a 0.3% up, it actually dropped by 0.6% and the pound benefitted as a result. This was the worst retail sales data for four years. It seems consumers have made cuts due high levels of personal debt in goods such as furniture, clothing and food.
Interest rates were kept on hold at 1.5% due to high debt levels, poor inflation and a slow down in wage growth. Despite this I am still of the opinion the UK economy is in a much worse position due to the uncertainty surrounding Brexit and a lack of political stability.
May fails to unite the Conservatives
Sterling’s rally quickly ended following the debacle which was Theresa May’s speech. Her aim was to unite the party and bring stability to the conservatives. I think it was close to the opposite.
She coughed throughout the speech and party posters fell on the floor to add insult to injury. A member of the public managed to breach security and hand her a P45 which had a fake Boris Johnson signature inscribed. In house bickering and the uncertainty of May’s job is not helping the pound. Political uncertainty will almost certainly impact the currency in question. A client of mine said it was so bad it seemed as though it was a sketch from Yes! Prime minister.
The bookmaker Betway have slashed odds to 5/6 that May will no longer be in power by the next general election.
On the Aussie front we could see further gains due to increased demand for Australia’s biggest export Iron ore. I am of the opinion Sterling is in a bad spot and we could see further losses short to medium term.
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