Currencies

Thursday June 19, 09:17 AM
Forex- Pound rises ahead of UK retail sales data as mkt digests BoE's Gieve news

LONDON (Thomson Financial) - The pound strengthened ahead of Thursday morning's release of UK retail sales figures, while markets continued to digest reports that Bank of England deputy governor intends to step down next year.

Retail sales are expected to have held up in May, showing an unchanged monthly reading, and a 4.2 percent rise from a year earlier.

'All eyes will now be on the UK retail sales figures as the outcome here could have a profound impact on the currency in the near term,' said Gary Thomson, head of sales trading at CMC Markets.

Thomson (Paris: FR0000184533 - news) added that if retail sales are 'more feisty' than markets expect, then 'this this could add weight to the BoE's emerging hawkish tendencies going forward'.

UK public finances figures for May are also due, and expected to show a weakening following a strong start to the fiscal year in April.

Meanwhile, markets continued to digest Wednesday night's news that Sir John Gieve will be leaving his post as deputy governor of the Bank of England in spring next year, more than two years before his tenure is due to end.

Analysts at BNP Paribas (Paris: FR0000131104 - news) said market players had initially 'taken this in a slightly pound negative light'.

Gieve's resignation opens a second vacancy on the central bank's rate-setting Monetary Policy Committee after the other deputy governor, Rachel Lomax, said she would quit at the end of June. Lomax's replacement is expected to be announced today.

Elsewhere, the Swiss franc slumped after the Swiss National Bank left the three-month Libor rate range unchanged at 2.25-3.25 percent unchanged for the third consecutive time, even though it raised its inflation forecasts.

'Many had expected such a verdict but some had hoped the central bank may turn proactive on inflation and hike rates by 25 basis points,' said Matthew Foster-Smith, an analyst at Thomson Reuters IFR Markets.

London 0756 GMT Hong Kong 0500 GMT

U.S. dollar

yen 107.59 down from 107.67

Swiss franc 1.0377 up from 1.0336

Euro

U.S. dollar 1.5539 down from 1.5561

pound 0.7920 down from 0.7942

yen 167.20 down from 167.56

Swiss franc 1.6125 up from 1.6096

Pound

U.S. dollar 1.9616 up from 1.9599

yen 211.05 up from 210.93