Pound Sterling Rose Slightly Due to the Sustained Euro Sell-Off
Pound Sterling Rose and the Rupiah Fell versus the US Dollar
Why did the pound sterling rise?
The pound sterling ended on a slightly positive note against the US dollar on November 17, 2015, even though the inflation levels fell on an annual basis in October. Sustained selling in the euro, especially in the euro-pound currency pair, also contributed to gains in the pound. The ECB’s (European Central Bank) dovish stance and an increase in the stimulus measures expected in December have been driving short positions in the euro versus the pound. On the other hand, unless inflation levels and economic growth start an upward trend, it will be difficult for the BoE (Bank of England) to begin a liftoff in the interest rates.
Annual inflation is in a negative trajectory
Consumer prices in October fell at an annual pace of 0.1%. This is similar to the fall in the previous month. The prices were in line with market expectations. On a monthly basis, inflation rose by 0.1% in October compared to a fall of 0.1% in September. Retail sales rose by 0.7% in October on a YoY (year-over-year) basis compared to a rise of 0.8% in September. Retail sales were below forecasts of 0.9%. On a monthly basis, the retail sales growth was flat in October.
Impact on the market
The iShares MSCI United Kingdom ETF (EWU) rose 0.41% on November 17, 2015. The WisdomTree United Kingdom Hedged Equity ETF (DXPS) was trading nearly flat with a slight rise of 0.09%.
Banking ADRs (American depositary receipts) were trading on a mixed note. HSBC Holdings (HSBC) rose by 0.48%, while Barclays (BCS) fell by 0.87%. ARM Holdings (ARMH) was trading on a positive bias. It rose by 0.42%. Rio Tinto (RIO) fell by 2.2%.
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