Home Daily Commentaries UK retail sales data providing GBP with little support

UK retail sales data providing GBP with little support

Daily Currency Update

UK retail sales surprisingly came in better than expected yesterday, reading 0.3% m/m vs -0.2% expected. Analysts expected the reading to reflect the worsening cost-of-living crisis in the UK to accompany the 40-year high on inflation earlier in the week. On the back of this we have seen the pound stall the decline vs the US Dollar for now, but downside pressures remain. Consumer confidence fell to record lows yesterday as concerns about a future recession grow in the UK.

Key Movers

The USD was the best performing currency yesterday as the US saw better-than-expected data from Manufacturing Index and Unemployment Claims. This strong data gives hope that the US economy could be able to skip a recession. Following the strong data, Fed members spoke and turned more hawkish than what was seen from the FOMC minutes on Wednesday. Fed member, Jim Bullard expressed a desire for a 75bp hike at September's meeting and added he isn’t ready to say the economy has seen the worst of the inflation surge.

Chinese President Xi Jinping and Russian President Vladimir Putin plan to attend a Group of 20 Summit to be held in Bali later this year, this geopolitical news could have added to the continued push on the dollar during early hours.

Early this morning we saw Germany’s PPI for July coming in much higher than expected 5.3% m/m vs 0.6% expected. It is rarely a big market mover, but the Eurozone current account release today should be a reminder of the zone’s shrinking external surplus, expected at -3.3bn.

Expected Ranges

  • GBP/USD: 1.1830 - 1.1935 ▼
  • GBP/EUR: 1.1740 - 1.1845 ▼
  • EUR/USD: 1.0020 - 1.0180 ▼