The British pound experienced a decline against the dollar on Friday morning, falling 0.3% to $1.2196. This drop followed weaker-than-anticipated UK retail sales figures, strengthening the argument for interest rate cuts by the Bank of England to stimulate economic growth. December retail sales volumes decreased by 0.3% month-on-month, according to the Office for National Statistics (ONS), contrasting with predictions of a 0.4% increase.
Supermarket sales volumes saw a significant decline of 1.9%, partially offset by increased sales in non-food sectors like clothing. This disappointing data has led UK traders to anticipate three interest rate cuts from the Bank of England this year. Neil Birrell, chief investment officer at Premier Miton Investors, commented on the situation, highlighting the negative impact of weak consumer spending on economic growth prospects and the potential need for government intervention. The pound also weakened against the euro, dropping 0.3% to €1.1845.
Gold Prices Near Five-Week High
Gold prices remained near a five-week high on Friday morning, poised for a third consecutive week of gains. This positive trend is attributed to recent US inflation data, which has fueled hopes of multiple interest rate cuts by the Federal Reserve this year.
Spot gold prices increased by 0.4% to $2,710.79 per ounce, while gold futures saw a slight dip of 0.4% to $2,740.30 per ounce. The weakening dollar, following softer-than-expected core inflation data, has supported gold prices. Ajay Kedia, director at Kedia Commodities in Mumbai, suggests that a breach of the $2,720 resistance level could propel gold prices towards $2,770. Analysts at ANZ emphasize gold’s role as a risk diversifier amid macroeconomic and geopolitical uncertainties.
Oil Prices Rise for Fourth Consecutive Week
Oil prices experienced an upward trend on Friday, marking a potential fourth consecutive week of gains. This rise is primarily due to the latest US sanctions on Russian energy trade, which have caused supply disruptions and increased spot prices and shipping rates.
Brent crude futures climbed 0.3% to $81.55 per barrel, while US West Texas Intermediate (WTI) crude rose 0.7% to $79.22. Despite a slight dip on Thursday, both contracts remain on track for a fourth weekly gain, with Brent up 9% year-to-date and WTI up 10%. Toshitaka Tazawa, an analyst at Fujitomi Securities, attributes the crude market’s strength to supply concerns stemming from US sanctions on Russia and expectations of a demand recovery fueled by potential US interest rate cuts. Increased kerosene demand due to cold weather in the US is another contributing factor. Investors are also monitoring potential supply disruptions following the upcoming political transition in the US. ING analysts highlight mounting supply risks as a key support for oil prices, anticipating a firm stance on Iran and Venezuela from the new administration. In other market news, the FTSE 100 index showed positive momentum, rising nearly 1% to 8,479.88 points on Friday morning.
