UK Retail Sales Miss Broadly, Knock GBP/USD Back from January Levels
- Consumption in UK – underpinning 62% of GDP – slowed by more than forecast.
- UK’s Office of National Statistics says miss due in large part to slump in food sales.
- Impact seen as transitory; slide in food sales prime cause.
= GBPUSD BEARISH
Consumption in the United Kingdom slowed by more than expected in August and as a result, market participants caught on the wrong foot were forced to exit bullish British Pound positions rather quickly. The weak sales data contrasts starkly with recently correlated PMI figures, which have hit highs unseen in five years.
The data, however, may have been skewed by a significant downturn in food purchases, which fell by -2.7% m/m after having added the same amount in July. This may be a transitory factor; August is typically a month for holiday and therefore consumption habits should be expected to be altered.
Here’s the data stocking British Pound weakness:
- Retail Sales (AUG): -1.0% versus 0.0% expected, from +1.2% (revised higher from +1.1%) (m/m)
- Retail Sales (AUG): +2.3% versus +3.2% expected, from +3.2% (revised higher from +3.1%) (y/y)
- Retail Sales incl. Auto (AUG): +2.1% versus +3.3% expected, from +3.0% (y/y).
GBPUSD 1-minute Chart: September 18, 2013
Charts Created using Marketscope – prepared by Christopher Vecchio
Following the release, the GBPUSD slipped from $1.6120 to as low as 1.6065, a fresh session. The pair remains higher than where it started the week, having opened at 1.5950 (although it remains off of its highs set overnight at 1.6165). The GBPUSD was last seen trading at 1.6072, also the 50% retracement of yesterday’s post-FOMC rally in the pair.
--- Written by Christopher Vecchio, Currency Analyst
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