Retail Sales Slide in March
GBP is under pressure today on the back of a negative set of UK retail sales released this morning. March retail sales came in at -0.9%, down sharply from the prior month’s 1.1% reading and worse than the -0.5% the market was looking for. UK economic concerns have been a major focus point over recent weeks on the back of the IMF warning that the UK stands to suffer the worst performance in the G7 this year.
UK Economic Concerns
Earlier this week, CPI was seen to be holding above the 10% level, cooling slightly to 10.1% from 10.4% prior. Given the sharp inflation falls seen elsewhere, the data is a worrying sign for the UK economy. Naturally, focus has shifted back to hawkish BOE expectations. However, with growing concerns over UK growth, prospects of further BOE rate hikes won’t necessarily translate into a stronger GBP near-term.
Hard Task for BOE
With unemployment seen increasing recently, consumer spending down and inflation still high, the BOE is in a difficult position. Speaking yesterday, BOE MPC member Tenreyro warned that UK rates are already too high for the economy to withstand and cautioned against further hikes. The concern in these comments along with today’s data has seen GBP well sold. Traders now look ahead to the next round of UK PMIs due later this morning.
Technical Views
GBPUSD
The rally has stalled for now into a test of the bull channel top, with price slipping back under the 1.2437 level. While below here, and with momentum studies turned bearish, the focus is on a deeper correction lower with 1.2270 the next support to note ahead of the channel lows deeper below.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.