We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The trio of central banks overseeing the commodity currencies have already cut their main rates to all-time lows. Get your market update from @CVecchioFX here: https://t.co/OSUXrN5P3j https://t.co/Cxt86jl28N
  • The Japanese Yen fell for a third consecutive week with price testing resistance into June open. Here are the levels that matter on the $USDJPY weekly technical chart. Get your #currencies market update from @MBForex here: https://t.co/1QPXP0g7Ew https://t.co/WUtXHoRoQX
  • $USDZAR: A rally from here could be an important tell as to whether the level seen as support previously (17.76) will turn into a point of resistance for sellers to lean against. Get your $USDZAR technical analysis from @PaulRobinsonFX here:https://t.co/TNsQ4JJu6E https://t.co/I4yCjs2ja0
  • The US dollar continued to sell-off this week and the greenback’s future will be decided by commentary from the White House and not the Federal Reserve over the coming days and weeks. Get your #currencies market update from @nickcawley1 here: https://t.co/lpHneO3s2h https://t.co/bZ5klohLNd
  • #Gold prices have continued to push higher as expectations have built for global Central Banks to remain very loose and passive with monetary policy for the foreseeable future. Get your $XAUUSD technical analysis from @JStanleyFX here: https://t.co/h5tF3kAZfd https://t.co/VAYy9FGHcQ
  • Major investment bank models have touted USD selling, given the outperformance in US equities relative to its counterparts over the past month. How is this likely to impact the month-end rebalancing? Find out from @JMcQueenFX here:https://t.co/MtNrHmXZpD https://t.co/YvoHlUsdVr
  • U.S. Market Analyst at https://t.co/JsVsSmefgR, Shain Vernier covers - ✔️ Safe haven assets in volatile markets ✔️ Central banks and governments ✔️ How will commodities trade in a recession Only on Trading Global Markets Decoded #podcast. Tune in here: https://t.co/1UmEzEbwiy https://t.co/X15k6b4ZyB
  • The month of May saw equities rise across the board. The #Dow Jones and #DAX 30 will look to hold above nearby support while the #Nasdaq 100 may look to attack all-time highs. Get your #equities market update from @PeterHanksFX here: https://t.co/dQxkG68R0I https://t.co/cgfcOs14qG
  • There is a dramatic departure between yield curve pricing for a recession and other measures of near-term growth; the Q2’20 Atlanta Fed GDPNow is extremely alarming.Get your market update from @CVecchioFX here: https://t.co/eMd3T8EwDO https://t.co/56oUP6we9U
  • The #DAX has now closed the gap from the beginning of March with the index breaking above 61.8% fib at 11592. Get your DAX market update from @JMcQueenFX here: https://t.co/wr67nkxc8z https://t.co/CkxPZn1v3t
Sterling Jumps as UK Retail Sales Soar but Inflation Clouds the Outlook

Sterling Jumps as UK Retail Sales Soar but Inflation Clouds the Outlook

2016-11-17 12:45:00
Nick Cawley, Strategist
Share:

Talking Points

- British Pound soars as October Retail Sales trumps analyst’s expectations.

- In value terms, sales recorded their highest rate of annual growth for 14 years.

- Inflation, via imported prices, a concern going into 2017.

The British Pound popped back above GBP/USD 1.2500 after UK retail sales beat even the most optimistic analyst expectations. The data showed the volume of goods sold online and in store rose by 1.9% quarter-on-quarter, dwarfing analysts’ expectations of a +0.4% increase. On a year-on-year basis, the retail industry was estimated to have grown by +7.4% in October, according to the Office for National Statistics (ONS). In value terms, sales were up by +6.6%, the highest rate of annual growth seen since 2002.

Commenting on the data, Kate Davies, ONS senior statistician said, “The strong figures this month have been boosted by several factors. Cooler temperatures in October boosted clothing sales as shoppers took their cue to purchase winter clothing, while the supermarkets benefitted from Halloween. This has also coincided with the strongest growth in internet sales seen for five years.”

Chart 1: UK Retail Monthly Sales (y/y) (October 2006 to October 2016)

Sterling Jumps as UK Retail Sales Soar but Inflation Clouds the Outlook

While today’s data will be welcomed by Chancellor of the Exchequer Philip Hammond ahead of next Wednesday’s Autumn Statement as a further sign of post-Brexit economic resilience, the future still looks uncertain. The fall in the value of the British Pound since the June referendum is increasingly being felt in the price of imported goods. The latest Bank of England Inflation Report highlighted the specter of inflation which is now expected to hit +2.7% in late 2017, up from its current level of +0.9%. And with wage growth expected to lag inflation, and with the recent jump in interest rates, household expenditure will face increasing headwinds going into next year.

For now the UK consumer seems to be happy spending despite the economic backdrop and retailers will hope this will continue into the fourth quarter and beyond. Continued spending, and perhaps big ticket sales ahead of anticipated price increases, will feed through into fourth quarter GDP data and give the government a boost ahead of next year’s difficult Brexit negotiations. The recent clutch of better-than-expected data will also keep further Bank of England interest rate cuts off the table, underpinning the recent pick-up in the value of Sterling.

The British Pound perked up on the retail sales release, trading above GBP/USD 1.2500 before settling back around 1.2470. Against the Euro, the Pound traded at 0.8575 before edging back towards the 0.8600 level.

Chart 2: GBP/USD 5-minute Chart (November 17 Intraday)

Sterling Jumps as UK Retail Sales Soar but Inflation Clouds the Outlook

--- Written by Nick Cawley, DailyFX Research

To contact Nick, email him at nicholas.cawley@ig.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.