GBP: Retail surprise tempers Pound outlook – TD Securities

FXStreet Insights Team FXStreet

TD Securities analysts note United Kingdom (UK) Retail Sales for March surprised to the upside at 0.7% month-on-month versus their 0.1% forecast and a flat market consensus. The strength was driven mainly by food and fuel, with Easter timing and front-loaded fuel purchases. They stress value growth outpacing volumes and see the data as flattering rather than signaling runaway UK economic strength.

Retail beat driven by food and fuel

"Retail sales surprised strongly to the upside, registering 0.7% m/m (TDS: 0.1%; mkt: 0.0%; prior: -0.4%)."

"The pickup was driven disproportionately by food stores and automotive fuel, rather than a broad based improvement in discretionary spending."

"Food sales were lifted by Easter timing effects, while fuel sales made an outsized contribution to the headline as front-loading volumes and prices both supported spending."

"As in recent months, value growth outpaced volumes, pointing to lingering price effects rather than a clear rebound in underlying demand."

"Overall, March’s strength flatteringly reflects seasonal and compositional factors, rather than point to runaway strength in the UK economy."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD sticks to neutral bias above 0.7100 amid bullish USD undertone

AUD/USD holds steady above 0.7100 during the Asian session on Monday as the US Dollar stalls its modest pullback from the highest level since late July amid persistent geopolitical uncertainties. Adding to this, the Fed's hawkish outlook supports the buck. However, bets on another RBA rate hike underpin the Aussie ahead of Governor Bullock's speech and Australian jobs data on Tuesday and Thursday, respectively.

USD/JPY steadies around 157.00 as BoJ's dovish rate hike undermines JPY

USD/JPY edges up at the start of a new week, stalling its retracement slide from 158.00, or a two-week top touched in reaction to the BoJ's dovish rate hike on Friday. Escalating tensions in the Middle East, along with bets for another Fed rate hike this year, lend some support to the US Dollar and the currency pair. Bulls, however, seem hesitant and await further geopolitical developments.

Gold remains depressed below $4,400 as Fed hike bets and Mideast jitters support USD

Gold struggles to capitalize on its recovery gains registered over the past two days and attracts fresh sellers at the start of a new week. The risk of a broader Middle East conflict helps the safe-haven US Dollar stall Friday's retracement slide from the highest level since late July. Moreover, the Fed's hawkish outlook supports the buck and keeps the non-yielding bullion depressed below $4,400.

The week ahead: Hawkish Fed sets the tone for flash PMIs, SNB decides on policy

The US dollar outperformed all its major peers this week, putting it on the front foot in anticipation of a hawkish Fed before Wednesday, and accelerating its advance after the central bank satisfied the hawkish market bets.

CFTC Report: Positioning turns more defensive as Yen longs build

The week in one sentence: Yen positioning surged into a sizeable net long in the week to September 15, while Oil buying accompanied a sharp price increase. CAD shorts also retreated, but Gold exposure remained crowded despite a lower price. Euro and Australian Dollar positioning weakened alongside softer currencies.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.