Currency news - Fragile Sterling correction

Fragile Sterling correction - 29-01-08

The latest UK CBI retail sales survey recorded a drop in the January sales index to +4 from +8 the previous month. The expected sales volume for February, however, was at +10 compared with expectations for a figure near zero and this improvement will ease immediate fears over a sharp deterioration in consumer spending levels.

There will still be strong expectations of a Bank of England interest rate cut at the February meeting, but with less speculation of a 0.50% cut.

The UK currency should secure some further protection from a growing lack of confidence in the global economy, especially as a serious UK deterioration has already been priced in. with some scope for a corrective recovery.

International developments are likely to be dominant over the next few days with the key Federal Reserve interest rate decision on Wednesday.

Tim Clayton
Investica Ltd
E-mail: tim.clayton@investica.co.uk
+44 (0) 1452 781001

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