UK Retail Sales Rebound, Pound Steadies
- UK retail sales rose by 0.6% month/month in June after a revised 1.1% fall in May.
- That will give some ammunition to the hawks on the Bank of England’s monetary policy committee and help to underpin the Pound.
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UK retail sales increased by 0.6% month/month in June after May’s 1.1% fall, suggesting that the important consumer sector is now helping to boost the UK’s sluggish economic growth. That will lead to further calls for a tightening of monetary policy, although the overall weakness of the economy and falling inflation mean that a withdrawal of stimulus is still many months away.
Retail sales were expected to increase by only 0.4% and, adding to the brighter picture, the drop in May was revised to 1.1% rather than the 1.2% fall previously reported.
In response, GBPUSD steadied after weakening earlier in the session to below the psychologically important 1.30 level.
Chart: GBPUSD Five-Minute Timeframe (July 20, 2017)
The improvement in retail sales last month could help lift UK inflation, which fell by more than expected to 2.6% from 2.9%, according to the latest data that caused a sharp selloff in the Pound.
--- Written by Martin Essex, Analyst and Editor
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