Talking Points
- Sterling got a modest lift despite a weak GfK consumer-confidence snapshot
- The headline figure ticked up a little, which may be what bulls are clinging too
- However, the prognosis for 2017 does not look good
The Pound Sterling rose early in Thursday’s Asian session despite the release of data showing that UK consumers are not feeling very festive as the crucial holiday sales period looms.
The consumer confidence index from research group GfK came in at -7 for December. Traders clearly chose to accentuate the positives in the report. That headline was actually a point better than both last month’s score and market consensus. GfK said that consumers’ apparent willingness to make major purchases helped the index tick up, but that uncertainty about domestic and global economic conditions was keeping the overall picture subdued.
Indeed, expectations for the year ahead are at their lowest ebb since April, 2013, according to GfK, with more households now worried about rising prices.The series has been in negative territory since the Brexit vote back in June, reaching a nadir of -12 in the immediate aftermath of that referendum shock.
Still, GBP/USD rose to 1.23610 after the figures, from 1.23519 before their release. Sterling has fallen more than 10% against the US Dollar since June’s vote and, while some retailers appear to have raised prices already, others may well wait until after the competitive holiday season.
Consumer spending has been robust, holding up despite a tumultuous year. Earlier this week the Confederation of British Industry employers’ group said that its members had seen the fastest sales growth in over a year in recent weeks.
Glass half full for GBP/USD?
Chart compiled using TradingView
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--- Written by David Cottle, DailyFX Research
