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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Retail sales beat; GBP remains near recent highs

09:20 20 September 2018

Sterling continues to trade near a 2-month high against the US dollar around the $1.32 mark this morning, aided by the release of some better than expected consumer spending figures. The FTSE is little changed on the day after ending Wednesday night at its highest level in a fortnight as the index looks to join in the counter-intuitive rally seen in global stocks since the US-China trade tensions rose further overnight on Monday.  

 

Retail sales provide high street tonic

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This year has seen a near constant negative news flow as far as high street retailers are concerned but the latest retail sales figures will provide a welcome tonic, with the number for August showing an unexpected rise of 0.3% in month-on-month terms. The reading is all the more pleasing given that the prior month was also revised higher to 0.9% from an already strong 0.7%, in addition to the fact that most analysts expected a contraction - probably due to the prior month being such a strong reading and benefiting from 1-off factors such as positive world cup related spending on beer, waistcoats etc!

 

Pound supported by more strong data

A better reflection of the bigger theme may be found in looking at the 3 months to August figures which showed a 2.0% growth, with food and household goods outperforming compared to last summer. Online spending set a new record of its proportion of total sales with almost 1 in 5 pounds being spent online during this period. Following on from yesterday’s higher than expected inflation reading today’s data provides more good news for the pound and has kept the currency close to 2-month highs against both the US dollar and the Euro. Having said that, economic data remains of secondary importance compared to Brexit developments and the initial noises coming out of Salzburg seem to suggest that both parties remain some way from agreeing terms.

 

Brexit developments to drive the Pound

Theresa May has reportedly told EU leaders that if an agreement can’t be reached by the end of a special Brexit summit pencilled in for mid-November then the UK would not seek to extend negotiations. Whether this is a negotiating tactic to try and strong-arm the EU into accepting a deal closely reminiscent of chequers or the actual government standpoint remains to be seen, but what can be said with a high degree of certainty is that things are coming to a head as far as Brexit is concerned and the developments in the coming weeks and months will be by far and away the biggest driving force on the strength of the pound going forward.

This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

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