LONDON: Sterling posted its first weekly gain in four weeks against the dollar on Friday, ticking up as a weaker greenback and better-than-expected retail data allowed investors to look past mounting pressure on British Prime Minister Boris Johnson.
Data on Friday showed retail sales volumes in May fell by 0.5% on the month, a slightly smaller decline than the 0.7% drop expected by economists polled by Reuters.
By 1446 GMT, the pound rose 0.24% against the dollar at $1.22915 and flatlined against the euro at 85.825 pence. The currency is up 0.59% on the week to the dollar. It was not much affected by news that Johnson’s Conservatives had lost two parliamentary seats, a crushing blow to the governing party that prompted the resignation of the party’s chairman.
Johnson - whose authority has been battered by revelations of lockdown-breaking party’s at his Downing Street office during the COVID-19 pandemic - recently survived an effort to topple him as party leader and according to rules, another confidence vote cannot be held for a year.
“Boris Johnson is under huge pressure because of ‘partygate’ and the bad election results,” said Mikael Olai Milhøj, Chief Analyst at Danske Bank.
“If that means he pushes much more forward on issues like the Northern Ireland protocol, we could see investors start to re-price Brexit risk premiums, but we are not there yet.” Meanwhile, the retail sales decline comes after Thursday’s PMI numbers for June, which showed a composite reading of 53.1, above the median forecast of 52.6. “High inflation, rising recession fears and central bank tightening are more important than domestic data readings,” said Milhøj.
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