GBPUSD retreats after mixed UK retail sales and PMI data

The GBPUSD pair retreated slightly after the mixed UK retail sales and flash PMI numbers. According to the Office of National Statistics (ONS), the headline sales rose by 0.5% between May and June. This was an improvement since the sales fell by more than 1.3% in the previous month. As a result, the sales rose by 9.7% on a year-on-year basis. Meanwhile, core retail sales rose by 0.3% and 7.4% on a MoM and YoY basis, respectively. The ONS attributed the rise in retail sales to the recent European football league. Meanwhile, business activity in the UK retreated slightly in July. The services PMI declined from 62.4 to 57.8 while the manufacturing PMI fell from 63.9 to 60.4. The composite PMI declined to 57.7 as the Delta variant spread.

The EURUSD remained in a consolidation phase as investors reacted to the latest ECB decision and the emerging divisions among members. The ECB issued a relatively dovish tone as it left its pandemic response tools intact. According to the Financial Times, there were divisions among policymakers about what to do next. Central bankers from countries like Belgium, Germany, and the Netherlands disagreed with the overall decision. The Dutch central bank governor wanted the bank to separate its interest rate guidance with that of quantitative easing. The German governor, on the other hand, warned that the policy will lead to higher inflation. Meanwhile, the pair reacted to the strong flash PMIs as the services and composite PMI rose to 60.4 and 60.5.

The price of crude oil held steady as the fear of the Delta variant subsided. The price of Brent rose to $74 while the West Texas Intermediate (WTI) rose to $72.20. This performance happened as investors priced in higher demand as the global economy recovered. Investors appear to believe that the recent supply additions will be accompanied by equally substantial growth in demand. Still, there are concerns about the rising US inventories. Data by the EIA showed that the total US inventories rose by more than 2.1 million barrels last week. This was substantially high considering that the country had a drawdown of more than 7.9 million barrels.

EURUSD

The EURUSD pair was little changed as investors reflected on the ECB decision while they waited for the Fed decision. It is trading at 1.1767, where it has been in the past few days The pair has formed a falling wedge pattern on the four-hour chart. The MACD and the Relative Strength Index (RSI) have also formed a neutral pattern. Therefore, the pair will likely end the week at this range and then rebound next week.

GBPUSD

The GBPUSD pair declined slightly after the latest UK retail sales data. The pair is trading at 1.3735, which is slightly lower than this week’s low at 1.3788. On the 30-minute chart, the pair has moved below the 25-day moving averages while the Relative Strength Index (RSI) has been in a bearish trend. It has also formed a double-top pattern. Therefore, the pair may keep falling as bears target the next key support at 1.3700.

UK100

The FTSE 100 index rose to 7,015 as the UK stocks bull-run accelerated. The index moved above the 25-day moving averages on the four-hour chart while the signal and histogram of the MACD moved above the neutral level. It is also along the 50% Fibonacci retracement level. Therefore, the index will likely maintain the bullish trend as investors target the key resistance at 7060.