Pound Sets a New 6-Month Low on Disappointing Retail Start to the New Year
THE TAKEAWAY: UK retail sales decline 0.5% in January, worse than expected -> King says BoE won’t subdue inflation because of weak economy -> Sterling sets a new six month low
UK retail sales (excluding auto fuel) fell 0.5% in January, disappointing expectations for 0.5% growth in sales and down further from the revised 0.4% retail decline in December. Retail sales were up 0.2% from January 2012, according to the UK Office for National Statistics.
The UK economy declined 0.3% in Q4 of 2012, and the economy will enter a technical triple dip recession if the UK sees negative growth continue in Q1 of this year. BoE Governor King recently said that the central bank remains supportive of output, and that the BoE will not subdue recent inflation because of the effect it could have on the economy. Signs of continued economic contraction are Sterling negative.
That is why the British Pound fell 40 points and set a new 6-month low below 1.5500 against the US Dollar following the retail sales release. GBP/USD may now see resistance by previous support line around 1.5500, and support may be found by a 7-month low at 1.5458.
GBPUSD Daily: February 15, 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.