UK Retail Sales
Two of the UK’s major retailers have announced dissapointing retail sales over the Christmas period with both Tesco and Marks and Spencer announcing worse than expected figures. M&S did have good food sales but their home furnishing and clothing sales were poor and has placed more pressure on Chief Executive Marc Bolland who has vowed to deliver improved performance. As I wrote in yesterday’s currency blog M&S has long since been considered as a good indicator as how the UK high street is performing and with £1 in every £8 spent in the UK spent at Tesco it is clear that the bad news from these two retailers is not what the UK economy wants to hear. While it is a concern that if these two retailers are performing poorly that the UK high street will have suffered too but there is an argument to state that the decline in these two major retailers is due to a rise in the likes of lower cost retailers such as Aldi and Lidl who are expected to show strong sales figures this year. Also, online sales over Christmas has clearly been a major part of Christmas spending so despite the bad news from Tesco and M&S it may not all be doom and gloom. It will be interesting to see how retail sales figures will come out tonight from the British Retail Consortium (BRC) and then the major Retail sales numbers on Friday 17th, a positive figure will help boost Sterling while a negative number could lead to Sterling weakness.
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US FED Announce Latest Minutes
Last night the Federal Reserve Bank of America (FED) released their latest set of minutes from the most recent interest rate decision. The minutes re-enforced the fact that the FED are still awaiting unemployment to fall to the 6.5% level before they consider hiking interest rates, there was however no mention as to how fast the tapering would continue. However, with new Chairperson Janet Yellen about to take the reins at the FED on the 1st February it was not expected that they would announce any major changes until she has settled into her new position. As a result it will be next months announcements that could be key, any mention from Yellen about tapering could set the tone for USD exchange rate movement for the short term.