The pound sterling held just below a recently struck 2½ year peak against the US dollar, fueled by speculation that the Bank of England may take interest rates even lower than they are now, possibly to sub-zero levels. Analysts say that if it does, it will be an attempt to help the economy which is struggling from yet another lockdown as a result of the COVID-19 virus. The prime minister recently announced tighter measures in Britain to thwart the spread of a new, potentially more threatening strain of the virus. Economists believe that the BoE will be compelled to provide some sort of additional stimulus via monetary policy when they meet next month.
As of 11:22 am in London, the GBP/USD was trading at $1.3575, down 0.2176%, off the session peak of $1.36341 while the low was recorded at $1.35619. The EUR/GBP was trading lower at 0.9027 pence, down 0.3093%; the pair has ranged from 0.90151 pence to 0.90778 pence in today's session.
Eurozone Data Fails to Help Euro
Retail sales figures and personal inflation data were released for the Eurozone earlier today with worse news than anticipated. Eurostat reported that November's retail sales, on an annualized basis, fell to -2.9% against a forecast of 0.8%, solidly down from the previous reading of 4.2%. The preliminary CPI number for November was lower than expected at -0.3% on an annualized basis, while analysts had expected a slight improvement to -0.2%. Core CPI, which strips out volatile components such as food and fuel, was flat at 0.2%, as analysts had predicted. On a brighter note, industrial confidence was shown to be better than expected at -7.2%, with a forecast of -8.1%, while the December economic sentiment indicator came in with a reading of 90.4, slightly better than than 90 reading expected. The EUR/USD was trading at $1.2258, down 0.5396% and off the earlier peak of $1.23449.