As traders await news from the European Union finance ministers’ summit today, the Pound is generally trending statically versus most of its peers. A slight depreciation can be linked to the Confederation of British Industry (CBI) Reported Sales which came in at 29 in June; missing the median market forecast 35. Although retail sales eased, retailers remain optimistic that momentum will pick up as the summer progresses. ‘Low inflation – expected to stay below 1% throughout this year – has given customers more discretionary income. The power of the pound in their pocket is going further and shoppers are spending more on treats, like flowers and jewellery, as well as on activities with their families,’ said Barry Williams, CBI Distributive Trades Survey Chairman and Asda’s Chief Customer Officer.
The European Union finance ministers’ summit today is important for the Pound because Prime Minister David Cameron will be presenting reforms on Britain’s relationship with the EU. Cameron is attempting to improve the relationship before the forthcoming EU referendum. Should he fail to negotiate a better deal for Britain, the Pound will slump as the EU’s reluctance to compromise is fodder for Euro sceptics. Speaking before today's summit, Mr Cameron said: 'This is my first European Council since the election and it's the first EU summit where renegotiation of the UK's relationship with the EU is formally on the agenda. 'This presents an opportunity to get the negotiation underway and to kick off a process to work through the substance and to find solutions. It will take us another step closer to addressing the concerns that the British people have about the EU. And closer to changing the status quo for the better and then giving the British people a say on whether the UK should stay in or leave the EU.'
The Pound Sterling to Malaysian Ringgit (GBP/MYR) is currently trending in the region of 5.8946.
The Malaysian Ringgit, meanwhile, edged lower versus many of its peers despite domestic data printing in line with expectations. April’s Unemployment Rate met with the median market forecast of a 3.0% jobless rate. The Ringgit depreciation can be linked to speculation that unemployment worsened after April amid concern that the government’s attempt to reform the labour market has not been successful. ‘The government either cracks down on corruption and wastage that benefits the elite, or it transfers the burden to someone else, in this case its employees. This may be a turning point in the patron-client relationship between Umno-BN and the civil service where, by choosing its short-term comfort, it sacrifices long-term security,’ Institute Rakyat analyst Yin Shao Loong said.
‘Government policy has led to Malaysia being categorised as one of the worst places to work in the world, ranked alongside Zimbabwe, Bangladesh and Saudi Arabia by the International Trades Union Congress in its annual survey of workers' rights. We only have to look at how MAS employees are being treated to feel some reasonable concern as to the fairness of any government-directed labour restructuring process,’ Yin added.