What's next for the pound
It's been a brutal whipsaw today in the pound after a dismal December retail sales report that showed:
- Sales ex fuel +0.7% vs +3.0% expected
- Including fuel -0.6% vs +0.6% expected
The prior readings were also revised lower.
The drops pushed the odds of a BOE rate cut this month up to 73% compared to 60% before the data. Intraday, the pound is down almost 100 pips after specs were caught leaning the wrong way into the data.
I think the chance of a cut will slowly rise to 100% even if we have to wait an extra month.
It's been a wildly disappointing run for the pound and I struggle to see how 1.30 or the Jan low of 1.2954 will stop the momentum lower.
