Home Daily Commentaries UK retail sales exceeds expectations

UK retail sales exceeds expectations

Daily Currency Update

UK retail sales saw a surprising jump in April, following the 1.2% fall in March 2022. The release announced early this morning showed higher spending on alcohol and tobacco in supermarkets as well as stronger clothing sales, resulting in a rise of 1.4% on the month, beating an expectation of -0.3%. The news joins data released earlier this week that unemployment is at a 50-year low. Despite consumer confidence being at an all-time low due to rampant inflation, data elsewhere has supported the pound’s climb from recent lows against the US dollar and euro.

GBP/USD opened Thursday’s session at lows of 1.2340 but climbed higher as interest in the US dollar eased, in part due to China contemplating easing COVID related lockdowns. Investors tend to favour the US dollar as a safe haven asset in uncertain climates. In the early afternoon, a mixed bag of US data showed manufacturing, employment and home sales all missed expected figures supporting the currency pair’s rise. GBP/USD did break 1.2500 overnight, but it’s below this big figure this morning. GBP/EUR also climber higher but has traded in a much narrower range. GBP/EUR currently sits just above 1.1800.

Key Movers

Accounts from Thursday’s European Central Bank monetary policy meeting provided more evidence that a majority of policymakers are becoming increasingly concerned about the inflation outlook. This has signalled that next steps could be for a faster normalisation process, which will likely be to follow other central banks in increasing interest rates sooner and possibly more aggressively. Market sentiment for a potential July interest rate hike has increased, but by how much remains uncertain.

EUR/USD has touched 1.0600 in the past 24 hours, but currently trades just under 1.0600 at the time of writing. GBP/EUR continues to yo-yo above and below 1.1800.

Expected Ranges

  • GBP/USD: 1.2420 - 1.2550 ▲
  • GBP/EUR: 1.1770 - 1.1860 ▲
  • GBP/AUD: 1.7610 - 1.7790 ▼
  • EUR/USD: 1.0475 - 1.0650 ▲