The pound has lost 30 pips vs. the euro and US dollar following significantly worse than expected retail sales for the UK.
Sterling exchange rates dipped after the announcement that retail sales fell 0.2% this month when expectations were for a 0.3% increase. This is particularly concerning as retail sales account for 60% of GDP in the UK. With yesterday's spending review detailing significant job losses for the economy, the outlook for the retail sector is bleak. It's also worth considering that VAT increase come into effect in 2011 and this could further damage an important but struggling sector of the UK economy.
For sterling this is all bad news, it is likely that the pound will suffer as a result of this news and I'm expecting to see 1.10 before the end of the year against the Euro.
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