GBP/USD Inched Lower As U.K. Retail Sales Data Posts Weaker
The pound posted lower against the U.S. dollar during the course of Thursday’s session, as the U.K. retail sales released a weaker report, fueled by mounting concerns over the outlook for British economic growth, despite an upbeat public sector borrowing data uplift some support.
GBP/USD settled at 1.3161 amid European trade, with a session low. Meanwhile, the currencies sequentially merged at 1.3183, easing 0.16%.
Further, Cable seemed to find support at 1.3061, while it has seen a session low and resistance at 1.3480, suggesting its highest peak on the record.
According to the U.K. Office for National Statistics, the retail sales have seen declines of 0.9% in June, compared to a 0.9% gain last year. Meanwhile, analysts were expecting a 0.6% drop in retail sales last month.
Retail sales added 4.3% on a year-on-year basis, compared to a 5.7% gain for May which was initially revised from the previous reading of a 6.0% gain. Consensus estimates a 5.0% rally.
Core retail sales, in exclusion of automobiles surprisingly lost about 0.9% on the month, compared to a 0.9% increase in May whose figure was initially revised from an earlier rally of 1.0%. Analysts expect the core retail sales to decline about 0.6% last month.
Weaker data results raised concerns over the strength of the British economy after the International Monetary Fund trimmed its forecast for U.K. growth down to 1.7% from the previous forecast of 1.9% for this year. In addition, growth forecast for 2017 was cut to 1.3% from April’s forecast of 2.2%, led by the Brexit vote.
The IMF forecast was downwardly revised as well for global economic growth in 216 to 3.1%, from the previous forecast of 3.2%, despite expectations to rebound 3.4% in 2017.
In other news, the data showed that U.K. public sector net borrowing declined to £7.31 billion in June from an upwardly revised total of £9.41 billion for the prior month. Analysts forecast that the public sector net borrowing to settle at £9.20 billion last month.
Sterling posted lower against the euro, with EUR/GBP is climbing 0.34% to end the session at 0.8366.
EUR/USD Forecast
The EUR/USD pair had a disappointing volatile session during the course of Wednesday’s session, testing the 1.10 level.
It appears that a break above the top hammer suggest a bullish sign, but an analyst said that it would only persist for a short term bounce. If it would hit above the hammer, it implies to wait for signs of disappointments to say it’s time for a sell.
The market seemed to settle at consolidating with a range between 1.10 levels on the bottom and the 1.12 levels above. It will remain unchanged unless it would break down the downside.
However, the European Union faces all uncertainties at the moment, and market players are just running to the greenback for security. As the 1.10 levels is breaking down, the next target will fall into 1.09 levels.
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