Trading the News: U.K. Retail Sales
What’s Expected:
Time of release: 07/18/2013 8:30 GMT, 4:30 EDT
Primary Pair Impact: GBPUSD
Expected: 0.2%
Previous: 2.1%
DailyFX Forecast: 0.0% to 0.6%
Why Is This Event Important:
U.K. Retail Sales are projected to increase another 0.2% in June and the ongoing improvement in private sector consumption should help to produce a more meaningful rebound in the British Pound as it dampens the Bank of England’s (BoE) scope to further embark on its easing cycle. As the BoE now votes unanimously to retain its current policy, it seems as though the central bank is slowly moving away from its easing cycle, and we may see the Monetary Policy Committee start to lay out a more detailed exit strategy over the coming months as the outlook for growth and inflation improves.
Recent Economic Developments
The Upside
Release
|
Expected
|
Actual
|
Jobless Claims Change (JUN)
|
-8.0K
|
-21.2K
|
Average Weekly Earnings inc Bonus (MAY)
|
1.4%
|
1.7%
|
Net Consumer Credit (MAY)
|
0.6B
|
0.7B
|
The Downside
Release
|
Expected
|
Actual
|
Consumer Price Index Core (YoY) (JUN)
|
2.3%
|
2.3%
|
Producer Price Index- Output n.s.a. (YoY) (JUN)
|
1.9%
|
2.0%
|
GfK Consumer Confidence Survey (JUN)
|
-21
|
-21
|
The ongoing improvement in the labor market paired with the uptick in wage growth may encourage U.K. households to increase their rate of consumption, and a positive print may further the case for the BoE to keep its asset-purchase program capped at GBP 375B as they see a slow but sustainable recovery in Britain. However, sticky inflation along with the weakness in consumer confidence may drag on retail sales, and a dismal print may dampen the appeal of the sterling as the central bank looks to implement a ‘mixed strategy’ in addressing the risks surrounding the region.
