UK Sales Largely Disappointing

It has been a contrasting few days for Sterling this week – poor inflation results followed by dissent in the BOE for a hike in the benchmark rate and yesterday a mixed bag of retail sales results. Data yesterday morning showed us that UK Retail Sales were weaker than expected in July, coming in at 0.1%, well below the 0.4% consensus. For the year, retail sales were up 2.6% which is still down by almost 1% from the 3.4% in the 12 month period to the end of June. These figures will take some pressure off of Mark Carney for now, especially following the MPC rate vote results – with interest rates now fading into the shadows from a realist’s point of view. GBP/USD will continue to be guided by the relatively hawkish minutes from the FED, which should fuel further gains for the USD and put Sterling on the back foot once more.There are not any data releases from the UK today.

We had a relatively busy day on the economic calendar for the Eurozone yesterday with the release of Markit Manufacturing and Service PMI data from France, Germany and the Eurozone as a whole. The Euro was helped by the stronger than expected French and German PMI’s, however, due to a complete lack of demand the gains were limited to modest at best. Even though German readings exceeded expectations they had still retreated from previous levels.The EMU Markit PMI Composite came in at 52.8 vs a 53.4 consensus – this only confirmed the slowing of the Eurozone economy.The other piece of data that carried some weight from the Eurozone yesterday was Consumer Confidence which again missed consensus as it showed a figure of -10 vs -9.0.Concentrations today will be firming on the Jackson Hole Symposium. Although most will be looking for what Janet Yellen has to say, ECB President Mario Draghi will also being making a speech at 19:30BST.

For the USD, most of the hard work was done overnight following the release of the FOMC minutes. Many expected a quiet day’s trade yesterday as the markets rested temporarily between the FED showing their cards a little and the Jackson Hole Economic Symposium. Despite a host of consensus beating data from the US, the Dollar was unable to take advantage and push either of its major counterparties back further. We witnessed more positive unemployment data with Initial Jobless Claims down by 14k and Continuing Jobless Claims coming in at 2.500m compared to 2.549m last week. Followed shortly after by Markit Manufacturing which hit 58 vs a 55.7 consensus. Existing Home Sales in the US rose 2.4% versus an expected -0.4%. Philadelphia Manufacturing also surpassed expectations showing an impressive 28 vs 19.2 consensus. Eyes will be on the Jackson Hole Symposium today and volatility can be expected. Fed Chair, Janet Yellen’s every word will be listened to and every piece of information will be deciphered for clues.