Pound Drops to Record Low Agaist Euro

123jump.com Staff
18 Dec, 2008
New York City

UK retail sales in November rose 0.3% from October. The unexpected rise in sales was supported by a rise in sales of food, household goods and other items. The pound falls to a record low against the euro on the expectations of a drop in interest rates and high government borrowings.

[R]1:00PM New York, 6:00PM London - U.K. retail sales unexpectedly rise 0.3% in November.[/R]

London stocks fell 0.1% led by financial and commodity stocks on worries of a deepening global recession.

In London trading FTSE 100 index dropped 0.1% or 3.69 to 4,320.50.

Of the FTSE 100 index stocks, 61 increased, 40 declined, and one was unchanged. Fresnillo led gainers in the index shares with a rise of 7.7% followed by Shire Plc gaining 6.5%.

Retail Sales Rise 0.3% in November

Office of National Statistics reported today total retail sales volume increased 0.3% between October and November, while sales in food stores advanced 0.2% in the period.

However, sales volume for non-specialised stores slid 3.8% for the three months to November from the comparable period a year earlier. Total sales volume advanced 1.7% in the quarter to November from the year ago period and sales in food stores in the review period also increased 0.9% from last year.

Sales volume for non-food stores edged up 0.9% in the three months to November. In addition, household goods stores declined 2.1% in the period.

The three monthly increase in total sales volume gained 0.5% compared with the previous three months and increased 0.9% for food stores.

Sales in the non-store retailing and repair sector rose 4.6% in the three months to November.

All categories showed negative growth within non-food stores, with the exception of sales at household goods stores that increased 3.9% on rising sales at electrical stores.

The average weekly value of sales in November gained 2.9% to £5.8 billion from a year ago.

Pound Falls to Record Low Against Euro

The British pound dropped 3% to a record low against the euro and declined against the dollar yesterday after the Office of National Statistics said the current account deficit soared to £13 billion in November.

Net borrowing stood at £16 billion, while net debt increased to £650 billion, 44.2% of gross domestic product, in November.

The British pound fell for the ninth trading day in a row and reaches to parity with the euro. The pound has been on the decline on speculation that the Bank of England will be forced to lower rates to zero. The latest report indicated the UK budget deficit is on the rise on a fall in tax revenues as the economy slips into a recession.

The pound sinks to 95.56678 pence for one euro and against the dollar declines to $1.53089. The BoE lowered its key rate to 2% and the ECB has lowered its benchmark rate to 2.5% and the Fed has lowered its target rate range to between zero and 0.25%.

Gainers & Losers

Fresnillo led advancers in the FTSE 100 index shares with a rise of 7.7% followed by increases in Shire Plc of 6.5%, in British American Tobacco of 6.3%, in Centrica Plc of 5.8%, and Sagecoach Group of 5.7%.

Standard Life led decliners in the index shares with a fall of 9.6% followed by losses in Royal Bank of Scotland of 7.9%, in Old Mutual of 7.2%, in HSBC Holdings of 6.9%, and Antofagasta of 5.8%.

Barclays declined 3.5%.

Commodity stocks declined after oil prices lost $1.4 to $40 per barrel and copper prices tumbled to $1.3225. Kazakhmys dropped 5.1%.

British Airways, Qantas Airways Call Off Merger

British Airways reported today that the company and Qantas Airways are calling off merger discussions. The talks break down after two companies failed to agree on management structure and control between two airlines.

“Despite the potential longer term benefits to both British Airways and Qantas, the airlines have not been able to come to agreement over the key terms of a merger at this time.” said British Airways in a statement.