Pound Rallies as Retail Sales Confirm Stronger Economic Sentiments
THE TAKEAWAY: UK retail sales rise 2.1% in May -> Sales confirm stronger economic sentiments -> Pound rallies
UK retail sales increased by 2.1% (excluding retail sales) in May, a rise in retail sales that has only been matched one other time over the past two years. The 2.1% rise in retail sales beat expectations for sales to only rise 1.0% and was better than the revised 1.2% decline seen in April. Retail sales rose 2.1% from May 2012, according to the UK Office for National Statistics.
The UK PMI’s for May also showed yearly highs, which Markit perceived to mean that the economy will expand by 0.5% in Q2 if the pace of growth continues. The BoE just announced yesterday that majority of the MPC members see signs of economic stabilization. Therefore, further signs of an economic pickup are Pound positive.
The Pound rose back towards 1.5500 against the US Dollar following the news of the rise of retail sales. GBP/USD may continue to see resistance by a 1.5600 line, and support may again be provided around 1.5250.
In other economic news, the Euro declined on a disappointing German PMI for manufacturing. However, the Euro-zone composite output index for June reached a new yearly high according to the initial estimate, but that did not help the Euro recover the lost points. Also, the SNB announced that it will maintain its 1.20 Franc cap against the Euro and its 3-month Libor target rate will remain at 0.00%. The SNB announcement led to a temporary rise in the Swiss Franc.
Following yesterday’s Bernanke press conference, Gold declined to a new 2-year low against the US Dollar, just above the 13,000 line. Asian and European equity markets also declined significantly following yesterday’s Fed guidance.
(How does a Currency War affect your FX trading? Take our free course to find out!)
EURUSDDaily: June 20, 2013
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to email@example.com .
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.