The pound lost ground on Friday despite new figures from the analyst BDO showed high street sales were buoyant in January, easing fears that the VAT rise and worries over the government’s austerity programme will hit consumer sentiment. Data showed that sales during the month were up by 9.1% from the previous January. Despite the strong figures reported by BDO, recent updates from retailers have not been encouraging.
The Insolvency Office reported that the number of people declared insolvent hit a new record last year and 2011 could be even worse as a multitude of factors threaten to push households over the edge. Personal insolvencies rose 0.7% to 135,089 in 2010. That’s the highest figure since records began in 1960 and comes despite a 14% decline in the last three months of the year.
Companies are also finding the going tough, but the number that went bust fell by 16% last year to 16,045. The number of receiverships, administrations or company voluntary arrangements tumbled by almost a quarter to 4,905.
On Thursday, the Bank of England is expected to take a decision on interest rate policy. Given the recent poor Q4 GDP data and positive PMI data last week, the markets are now anticipating a possible interest rate increase in the UK as early as May. It will be of interest to see whether any more policy makers join Martin Weale and Andrew Sentance in calling for an increase in UK interest rates.
The dollar rose against major rivals on Friday as investors picked through the latest US jobs figures. In a mixed report, data showed a surprise drop in the unemployment rate from 9.4% in December to 9% last month alongside disappointing employment growth with only 36,000 created last month, according to the Labor Department, well below forecasts of at least 140,000.
With European Central Bank (ECB) President Trichet downplaying the inflationary threat in Europe after being somewhat hawkish at the January meeting, the euro also fell across the board.
Commentary by Tony Redondo
“Any opinions expressed in this document are those of TorFX analysts. Any analysis and/or forecasts provided are aimed at helping clients understand market conditions and developing trends. Clients are wholly responsible for their own trading decisions.”
