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London - The pound pared declines, clawing back from this week’s lowest level, after data showed that retail sales in the UK rebounded in June.
Sterling is still on course for a fourth day of losses, weighed down by the fading prospects of a Bank of England interest-rate increase after inflation slowed in June. Markets are closely watching data to gauge if last year’s vote to leave the European Union is having an negative impact on the economy.
“It makes sense that the pound doesn’t move much,” said Lee Hardman, a foreign-exchange strategist at MUFG in London.
“The data doesn’t really change the underlying trend that retail sales growth has softened this year. It would take a run of stronger reports to ease concerns over the slowdown in consumer spending.”
• GBP/USD was 0.3% weaker at 1.2980 as of 11:17, off an earlier low of 1.2972; it has retreated 1.1% from a 10-month high of 1.3126 reached on Tuesday.
• The pair broke through 1.3006 Fibonacci support, next support at 1.2984-75, July 6, 7 highs, and at 1.2955, July 13 high.
• Resistance at 1.3071, pivot r1, support at 1.3006, 38.2% Fibonacci of July 12-18 move The quantity of goods sold in stores and online rose 0.6%, more than economists forecast, following a 1.1% decline in May, figures from the Office for National Statistics showed on Thursday.
• Sales excluding auto fuel jumped 0.9% compared to a 1.5% drop previously. However, “given its volatile nature, we do not expect today’s data to prove a sustainable market driver,” analysts at Credit Agricole wrote before the data.
“If anything, we stick to the view that incoming data is unlikely to prove constructive enough in order to drive medium-term inflation and rate expectations higher.”
“This in turn suggests that GBP upside is likely to remain limited around the current levels” Sterling has struggled to hold gains as Brexit negotiations proceed.
Trade Secretary Liam Fox said on Thursday that Britain “can of course survive with no deal” and has had “positive response” at World Trade Organisation over terms after UK leaves EU Yield on 10-year gilts climbs 2 bps to 1.21%, after 11 bps decline in the previous three days.
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