UK: Pound back on track? - Investec

Research Team at Investec, suggests that hot on the heels of Wednesday’s Ipsos Mori poll, Sterling ascendancy continued in early trading yesterday after UK retail sales figures for April posted a bigger rebound than expected, retracing the entire fall seen in March, which in itself has seen a positive revision.

Key Quotes

“Headline retail sales rose 1.3% m/m rebounding from the 0.5% fall seen in March (-1.3% previous estimate) and beating both market and our own expectations of a +0.6% gain. GBPUSD promptly moved back above 1.4600 while GBPEUR consolidated recent gains and held above 1.3000.

Back home and in a speech to London Business School, MPC member Vlieghe commented that the UK economy has slowed and may require additional stimulus if it doesn’t rebound quickly in the event of Britons opting to stay in the European Union. The comments suggest Vlieghe may vote to ease policy even if Britons choose to remain part of the EU on June 23. Taking questions after the speech, he said if additional stimulus was needed, “both rate cuts and more quantitative easing should be on the table.”