A third consecutive monthly increase in UK retail sales has provided further support to the pound which has had a fairly quiet week after the recent fireworks. The FTSE 100 is little changed on the day and remains close to its weekly high.
Data lends further support to GBP rally
UK retail sales in August rose by the most in 4 months, in what is another positive data point for the pound. A rise of 1.0% m/m is well above the consensus forecast for a 0.2% increase and the news has been warmly greeted by sterling traders with the pound popping higher immediately after the release. The pound has pulled back a little so far this week following the stellar gains seen last time out but this morning’s data provided a further catalyst for pound strength with the GBPUSD rising back close to last week’s high around the 1.36 handle before settling into the middle of its range as the morning wore on. Looking forward, this evening’s Fed rate decision could well be hugely significant for the USD which may in turn cause a change in the main driving force for this pair, which has been following the lead of the pound for the past week.
GBP and FTSE moving inversely
The appreciation in the pound weighed on the FTSE 100, with the benchmark dropping back lower following the release after earlier rising to its highest level of the week shortly after the open. Similar to the pound, the market has now settled into the middle of its range but the index remains below the key 7300 level and could well come under more selling pressure going forward, especially if the pound takes another leg higher.
Retail stocks lead the risers
Several of the best performing blue-chips in London this morning are those in the retail sector with Marks & Spencer and Tesco building on yesterday’s gains. Next is also on the rise, with the clothing company honing in on its 2017 peak which was recorded just last week. Elsewhere, Diageo has seen its stock come under pressure after the beverage company warned its first-half sales growth is likely to suffer. The maker of Johnnie Walker whisky and Guinness expects the timing of the Chinese New Year as well as a ban on selling alcohol near Indian highways to weigh on its results and the stock has slid some 2% in response.
CFD’s, Options and Forex are leveraged products which can result in losses that exceed your initial deposit. These products may not be suitable for all investors and you should seek independent advice if necessary.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.