Weak UK GDP Data Caused Fall of the Pound
The British pound accelerated the decline against the US dollar after the UK GDP data for the fourth quarter were revised downward. In addition, retail sales slowed for the third month in a row in February, according to CBI. The Office for National Statistics reported that Britain's economic growth was 0.4% in the last quarter of 2017, below the forecast of +0.5%. On an annual basis, the UK economy grew by 1.4% in the fourth quarter, below the expected growth of +1.5%. The balance of retail sales according to CBI fell to +8 in February from +12 in January. Economists had expected growth to +13.
The euro was under pressure from weak data on the business climate in Germany, but later the mood of the players was supported by the publication of the minutes of the last ECB meeting. The Ifo Business Climate index fell to a five-month low of 115.4 from 117.6 in January. It was expected that the figure would drop to 117.1.
The ECB protocol noted that the ECB leaders at the January meeting felt that inflation was still too low and it was too early to change monetary policy. The ECB can still start a discussion on the adjustment of the language at the beginning of this year, but members of the controller management concluded that the bank needs to avoid sudden changes and to monitor closely the strengthening of the euro.
The US dollar tries to extend post FOMC minutes gains. Initial jobless claims fell by 7k to 222k in the week ended February 17. Continuing claims declined by 73k to 1.88m in the week ended February 10. Canadian dollar fell sharply after weak retail sales data. Headline retail sales fell by 0.8% mom in December versus expectation of -0.1%. Ex-auto sales decreased by 1.8% mom, versus expectation of 0.0%.