USD gains strength in face of weak retail sales

Key Movers

The pound took a slight hit on Thursday as it was revealed that the UK economy shrank by 2.6% in November. It was widely assumed that these figures were not going to be great, considering the UK was in a national lockdown throughout the month. The retail/shopping sector contracted by 3.6% and the services sector is now 9.9% below February levels, according to the Office for National Statistics. The UK’s GDP was 8.5% below pre-pandemic peak. Sterling has remained fairly unphased by technical data in the second half of 2020 and seems to be continuing the trend into 2021. The data also showed that EU imports were up $10bn, as businesses look to stockpile goods, foods, and medicines in case the Brexit transition gets messy.The Australian dollar shrugged off Wednesday’s downturn and rebounded back through 0.7750 to test 0.78 US cents. With little of note on hand through the domestic session, the AUD tracked sideways bouncing between 0.7730 and 0.7760, as investors sidelined bets ahead of President-Elect Joe Biden’s update on planned fiscal stimulus, commentary from Fed Chair Jerome Powell and a crucial US jobless claims report. The USD’s rally this morning stifled much of any gains made yesterday. The promise of lower interest rates helped the AUD test another break above 0.78 touching 0.7805, before edging lower into this morning open.