The pound lost ground versus other major currencies during early Friday trading, following the publication of May’s retail sales figures for the UK, which fell short of expectations. Investors looked at last month’s performance of the retail sector with some concern, as the country’s economic recovery, and the strong performance of the pound, have to a large extent been driven by consumers spending savings accumulated during the months of lockdown. This slowdown could mark the end of a ‘Goldilocks’ period for sterling, with the shine of a successful vaccination program wearing off, following the extension of the country’s partial lockdown, and consumer spending receding as the end of furloughs looms.
Gold gained approximately 1% during early Friday trading, following a slowdown in dollar gains, however the precious metal is still on track for the worst weekly performance since March 2020. With investors pricing in the adoption of a more hawkish stance from the Fed, the dollar will be likely to remain supported, at least in the near-term, presenting an important headwind for gold in the weeks ahead.
EU stocks slid lower for the last trading session of the week, alongside Chinese shares and US futures contracts on the S&P 500, amid a continuing shift in the mindset of investors following the recent hawkish switch from the FOMC. It is now clear to most investors that we are slowly entering a new market phase with this change in monetary policy sparked by rising inflation. This is mostly seen as good news, with the recent solid data showing a strong recovery underlining the economic progress registered since the start of the pandemic crisis more than a year ago. That said, with stock markets no longer artificially supported, rotation between growth stocks and defensive sectors are likely to continue. On the other hand, there are some bearish leverages looming: rising virus numbers from the new Delta variant could seriously dent reopening in the UK and the US, while tension between Washington and Beijing regarding a new ban on Chinese products could also spark a new cautious trading stance from traders.
Pierre Veyret– Technical analyst, ActivTrades
Disclaimer: opinions are personal to the authors and do not reflect the opinions of LeapRate. This is not a trading advice.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.
