Sterling plummets after poor UK retail sales

Sterling dropped sharply against the dollar after poor U.K. retail sales data. GBPUSD dropped to a London session low of 1.5769 from 1.5891 within 30 minutes of the data that was released at 09:30 GMT.

Retail sales in the U.K. declined in February by 0.8 percent as reported by the U.K. Office for National Statistics on Thursday. This was lower th
an the forecast for a 0.4 percent monthly fall. What was worse was that the January number was revised down to 0.3 percent from 0.9 percent in the initial estimate.

The poor sales data might provide the first indication that U.K. household spending was squeezed to the limit and British consumers are now cutting back even more on their spending. Spending power has been hit by high inflation and wage growth that has failed to keep track as well as fuel prices that have dampened discretionary purchasing power.

The weak data raises concern that the Bank of England could start thinking again about further quantitative easing, which is a measure than has a weakening effect o the pound.

Euro falls below $1.32

USDJPY slid down to 83.28 in the U.S. trading session from an earlier high of 84.08. The dollar decline accelerated after lower than expected U.S. existing home sales.

Elsewhere, the dollar gained against the euro, Canadian and Australian dollar. The ICE U.S. dollar index which tracks the greenback against six major currencies, rose to 79.654 compared with 79.616 on Tuesday.

EURUSD fell to a low of 1.3177 during the U.S. session as risk aversion returned and markets were cautious as the focus is beginning to shift to Spain and away from Greece. Earlier, the euro had climbed to an almost two-week high of $1.3283 after the Greek parliament had approved the second bailout deal.

The widening in the gap between Spanish bond yields and those of safe-haven German Bunds sparked concerns over the euro zone debt crisis. EURJPY fell to 110.03 from 111.42.

USDCAD rose to 0.9934 after bouncing from an earlier low of 0.9873. AUDUSD extended losses to a session low of 1.0420 compared to an earlier high of 1.0523.

Sterling fell sharply against the dollar after the release of the Bank of England minutes from the last policy meeting on March 8. The minutes were more dovish than expected and showed two MPC members wantedfurther stimulus measures and to expand the bank’s asset purchase program by 25 billion pounds. Also disclosure of February’s much higher-than-expected UK public sector borrowing figures weighed on the pound.

Meanwhile, British Finance Minister George Osborne unveiled his 2012 budget today , with deficit cutting measures. GBPUSD fell further to a low of 1.5816 in the U.S. session from an earlier high of 1.5922.

The dollar dropped sharply against the yen after a disappointing U.S. home sales report.

Existing home sales unexpectedly fell in February and the supply of properties on the market rose, underscoring the many hurdles for a housing market recovery.

The National Association of Realtors (NAR) said existing home sales slipped 0.9 percent to an annual rate of 4.59 million units last month. Economists polled by Reuters had expected sales to rise to a 4.62 million-unit sales pace last month.

USDJPY dropped to 83.72 within 20 minutes of the data, from a pre-data level of 83.96.

EURUSD initially fell from 1.3225 after the data to 1.3211 then jumped to 1.3255.

However, January’s sales pace was revised up to 4.63 million units from the previously reported 4.57 million units.

About 33 percent of pending contracts were cancelled, the NAR said. Investors bought 23 percent of homes in last month, with first-time buyers accounting for about third of the transactions.

UK finance minister Osborne unveils 2012 budget

The United Kingdom Annual 2012 budget plan was unveiled by British Chancellor of the Exchequer George Osborne . The finance minister suggested that the British economy looked set to avoid a renewed recession and the recovery will pick up speed next year.

The following statements are reactions to the government’s economic forecasts, business measures and new tax proposals:

ROSS WALKER, RBS

“All very much as expected, barely any changes at all to the growth and borrowing numbers.

“All very much as expected on the macro side (..) and thus far the micro policy changes are all very much as had been leaked. It looks from a market point of view to be fairly neutral.”



GEORGE BUCKLEY, DEUTSCHE BANK

“The numbers are not vastly different to what was expected and certainly not vastly different to what was announced just a few months ago.

“Growth was revised up slightly for 2012 to 0.8 percent (from 0.7 percent) – while this is the first upward revision we have seen in quite some time (since 2009) it is clearly very modest.”



BRIAN HILLIARD, SOCIETE GENERALE

“The headline grabber is the cut in income tax. He said the higher rate didn’t raise any extra money anyway, so economically he can justify it but politically I think it’s a bit of a gamble.

“I’m a little bit surprised to see them lower the claimant count forecast, so they are a little bit more optimistic about employment and unemployment, which needs to be looked at.



PHILIP SHAW, INVESTEC

“Nothing particularly dramatic. The GDP forecasts look reasonably similar to the autumn statement numbers, it’s not a massive shift in the economy between November and March.”

Euro slides; pound declines after BOE minutes

The euro’s advance against the dollar was soon capped in early European trading hours. EURUSD peaked at 1.3283 before easing down to 1.3211. EURJPY opened the session at 110.94 and extended gains to 111.42 before easing. The main driver behind the rise in the euro earlier today was the Greek parliament’s approval of the second bailout deal.

Sterling fell sharply against the dollar and euro after the release of the Bank of England minutes from the last policy meeting on March 8. The minutes were more dovish than expected and showed two MPC members wanted to expand the bank’s asset purchase program by 25 billion pounds.

Meanwhile, disclosure of February’s much higher-than-expected UK public sector borrowing figures also weighed on the pound. British Finance Minister George Osborne unveiled his 2012 budget today , suggesting that the British economy looked set to avoid a renewed recession and the recovery will pick up speed next year. GBPUSD fell to a session low of 1.5821 from an earlier high of 1.5922. EURGBP rose to an eight-day high of 0.8369 after the BOE minutes but soon slid back down to 0.8339 on a broadly declining euro .

The dollar rose against the yen and Swiss franc ahead of key U.S. economic data that is expected to show sales of previously owned U.S. homes probably rose in February to an almost two-year high, adding to signs of stabilization in the real-estate market. If the data come in strong, this will be dollar-positive.

USDJPY broke out of the 83.52/76 range it was trading in the last two session and rose to 84.08 in the European session.

Dollar also bounced against the Swiss franc, with USDCHF rising to a session high of 0.9125 from 0.9076.

The Australian dollar’s attempt to gain ground against the greenback ran out of steam. AUDUSD was capped at a European session high of 1.0523 before the broadly strengthening USD pressured the pair down to 1.0443.

Sterling drops after dovish BOE minutes; GBPJPY hits 9-mth high

Sterling fell sharply against the dollar and euro after the release of the Bank of England minutes from the last policy meeting on March 8. The pound hit a nine-month high against the yen.

The central bank’s Monetary Policy Committee voted 7-2 to keep its asset purchase program unchanged at 325 billion pounds. The two members that voted against and wanted to expand stimulus were Adam Posen and David Miles. They wanted to see an increase to the asset purchase program by 25 billion pounds.

The BOE minutes were more dovish than expected and showed policy makers saw a “clear risk” surrounding the outlook for crude oil prices.

“If oil prices were to rise to a level significantly higher than the committee currently assumed, then that would tend to slow the global and domestic recovery, reduce su

pply growth, and put upward pressure on domestic costs and prices,” the minutes said.

Spencer Dale, Chief Economist for the BOE said on Tuesday that U.K. inflation may not slow as much this year as forecast due to tensions in the Middle East pushing oil prices higher.

Further weighing on the pound was a report from the U.K. Office for National Statistics that showed higher-than-expected UK government borrowing. Public Sector Net Borrowing rose to 12.9 billion pounds from the 5.2 billion expected.

Following the data BOE minutes at 09:30 GMT, GBPUSD dropped to 1.5842 from a pre-data level of 1.5898. EURGBP rose to a session high of 0.8369 from 0.8342. GBPJPY hit a nine-month high of 133.35.

The focus now turns to the U.K. budget plan to be released at 12:30 GMT by Chancellor of the Exchequer George Osborne.

Greek parliaments ratifies second bailout deal

The euro advanced higher against the yen during European trading hours, to extend gains from the prior Asian session, hitting a fresh near 5-month high.

EURJPY reached 111.24 as the single currency got a lift against an ailing Japanese currency that has been weakened in the wake of monetary easing by the Bank of Japan last month. EURUSD climbed highe

r to 1.3283

Meanwhile, euro got an extra lift today after news late on Tuesday/early Wednesday morning that the Greek parliament ratified the second bailout deal, which will see the debt-ridden nation receive an additional 172 billion euros of aid from the EU and IMF.

The results of the bailout approval vote were 213 lawmakers supporting the loan deal, and with 79 deputies voting against it. Eight abstained from voting.

Approval of the bailout deal will set the stage for a round of harsh measures that international lenders have set as a precondition for the funds. The agreement was signed off in early March by Greece’s euro-zone partners, which ended months of negotiations and caused concerns in the markets over fear of the Greek debt crisis spreading to the rest of the euro zone. This put extreme pressure on the euro, which fell to levels as low as $1.26.