Sterling Falls Again as UK Retail Sales Disappoint

The Sterling declined today as the Office of National Statistics (ONS) released the retail sales data for December. The data showed that the retail sector continues to struggle in the country. In the three months to December, the quantity of goods that were bought in the UK declined by 1.0%. The decline was spread across all retail sectors. In December, retail sales declined by 0.6% when compared to November. This was the fifth consecutive month of losses. It was also worse than the consensus estimates of 0.5%. The online segment of retail sales was 19% in December vs 18.9% in November. The core retail sales declined by -0.8% in December. These numbers raise the likelihood that the BOE will slash interest rates. This is after this week’s CPI and GDP data.

The euro declined after Eurostat released the closely-watched inflation numbers. The numbers showed that the annual inflation rate in the euro area was 1.3% in December, up from 1.0% in November. The rate was 1.5% in the same month in 2018. In the European Union, annual inflation was 1.6% in December, up from 1.3% in November. The countries with the lowest inflation rates were Portugal, Italy and Cyprus, while countries with the highest were Hungary, Romania, and Czech Republic. The biggest contributor to the euro area CPI was from services, food, and alcohol. Meanwhile, production in the construction sector in November rose by 0.7% in the euro area and 1.1% in the EU28. 

Wall Street continued to rally as the market continued to reflect on the recently-signed trade deals. Trump signed a trade deal with China on Wednesday while the senate passed the USMCA deal yesterday. The market also shrugged-off the Donald Trump impeachment proceedings that have kicked-off. Futures tied to the Dow and Nasdaq rose by 94 and 40 points respectively. Part of the reason of the stability is the positive earnings season. Just yesterday, Morgan Stanley reported a profit of $1.30 a share on $10.9 billion in revenue. This was higher than the consensus estimates of $1.02 and $9.8 billion. In general, most US banks, except Wells Fargo, have released positive earnings.

EUR/USD

The EUR/USD pair declined to an intraday low of 1.1123. It moved below the important support line shown in yellow below. The price is also along the 23.6% Fibonacci Retracement level on the hourly chart. It is also below the short (14) and medium-term (28) exponential moving averages. The pair may continue to move lower since the pair has broken an important support level.

GBP/USD

The GBP/USD pair declined today as the market priced-in a rate cut from the BOE. The pair dropped from a high of 1.3120 to an intraday low of 1.3040. The day’s high was along the 50% Fibonacci Retracement level. The pair also broke past the important support level shown below. The price is also along the lower line of the Bollinger Bands. The RSI has also been moving lower. The pair will likely continue moving lower to test the 23.6% Fibonacci level of 1.3030.

AUD/NZD

The AUD/NZD pair rose today after positive economic data from China. The pair seemed to end a downward trend that started on Wednesday, when it was trading at 1.0458. The pair moved from an intraday low of 1.0370 to a high of 1.0410. The price is slightly above the 61.8% Fibonacci Retracement level and along the upper line of the Bollinger Bands. The RSI, which was previously falling has recovered and is a few points below the overbought level. The pair may still resume the downward trend during the American session.