Pound falls despite weak dollar

12/22/2022

1 minute read

2022.12.22 00:45

Wednesday sees a sharp decline in the GBP/USD. The pound is down 0.74 percent in the North American session, trading at 1.2093.

Retail Sales Outperform

Today, the UK CBI Realized Sales provided an unexpected surprise. Volumes of sales in December rose 11 points, indicating a significant rebound. This easily beat the consensus reading of -21 and the reading of -19 in November. However, retailers anticipate a decline of -17 in January and anticipate that the recovery will be brief.

On Tuesday, the UK will publish the Final GDP for the Third Quarter. Following a similar GDP release in the second quarter, the consensus figure is -0.2%. The UK economy would technically be in recession if it experienced negative growth for two consecutive quarters, but even without this definition, it is evident that there is a recession. The UK is expected to enter a recession that will last longer than one year and result in a massive 7% drop in household incomes over the next two years, according to the Office for Budget Responsibility (OBR).

Families have been hit by a twofold punch of high expansion and increasing loan costs, and wages have neglected to stay up with expansion. Today, tens of thousands of ambulance workers in England and Wales went on strike, and more employees in the public sector are expected to do the same this winter. This raises the possibility of a wage-price spiral, which would make it harder for the Bank of England to control inflation, which is still at double digits.

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On Tuesday, we will also examine UK Revised Business Investment for the Third Quarter. After the same number in the second quarter, a weak release of -0.5% is expected.