Global Themes

Sterling surprise, will the Pound be able to ride out Brexit?

  • Retail sales causes the pound to soar to one-month high
  • Is Greece back to its old tricks?
  • Four ways to help the Dutch Government

Retail Sales

Retail sales causes the Pound to soar to one-month high
UK retail sales came in much higher than expected, eradicating worries about weakening consumer sentiment as the UK approaches EU exit negotiations.

Retail sales grew by 1.4% from January to February, beating the forecasted 0.4%. This caused the Pound to rally against the US Dollar, reaching the highest level since February 24th. Over the last 3 months UK retail sales have been weak with analysts suggesting that high fuel prices have eroded consumers’ disposable income.

JP Morgan released a statement yesterday after the figure was released stating that: 'the concerns about the UK economy are overdone'. This is in contrast to many of the major banks who have warned that the Pound could fall below the 1.20,  most notably Deutsche Bank, who have predicted 1.06 by year end.

The Pound has lost a fifth of its value since EU Referendum in June but, after Tuesday’s strong inflation figure combined with the yesterday’s retail sales, this could be the prompt that the Bank of England need to consider raising interest rates this year.

Greece

The Greek Central Bank increased it’s emergency liquidity ceiling yesterday, while Finance Minister Tsakalotos is locked in talks with creditors.

Greek deposit outflows have continued prompting the country’s Central Bank to raise the emergency liquidity ceiling as lenders fear that they could face an economic collapse similar to 2015. The Central Bank raised the ceiling to 46.6 billion EUR, a 400 million EUR increase.

Negotiations between Greece and their bailout auditors have entered a stand-off which risks leaving the country in a position that could see them unable to service their debt requirements this summer

Holland

Four Dutch political parties are investigating whether or not they can agree on key policies in order to form a coalition government.

The Dutch Liberals, Christian Democrats, the centrist D66 Party and the Greens meet today to discuss key issues. This comes as the share of votes were distributed across a large number of parties meaning that the Liberal Party will need to enter into a four-way agreement to take power. Mark Rutte is predicted to remain as Prime Minister but a big question remains around what policy concessions he will need to make in order to convince the other parties join him.


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