UK Retail Sales Overview

The UK Retail Sales, scheduled to be published at 06:00 GMT on Friday, is expected to ease from 12% prior advance to 8% MoM in June. Total retail sales are still seen depleting 6.4% over the year in the reported month, though up from -13.1% booked previously.

Meanwhile, core retail sales, stripping the basket off motor fuel sales, are also likely to trim the coronavirus (COVID-19)-led losses with +7.5% MoM and -3.7% YoY numbers.

Deviation impact on GBP/USD

Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 10 and 80 pips in deviations up to 3.5 to -1.5, although in some cases, if notable enough, can fuel movements of up to 150 pips.

How could it affect GBP/USD?

Given the recent signals on the BOE’s negative rates jostling with mixed data, any recovery in the key contributor to the UK GDP can help the GBP/USD pair to extend recent gains. However, the moves should be analyzed separately as the preliminary readings July month PMIs will follow the Retail Sales update around 08:30 GMT. Hence, positive data will offer additional strength to the Cable’s run-up to piece 1.2800 while downbeat outcome will have another chance, in the form of PMI, to regain the power following initial declines.

TD Securities anticipate a sustained recovery in the UK Retail Sales figures as they say,

We look for retail sales to post another substantial gain in June, rising 11.2% m/m. We should see larger gains in clothing and most other non-food retail categories, with UK shops opening up again for business around the middle of the month. Online sales in particular, and food stores sales to a smaller extent, are likely to pull back as the lockdown eases and consumers start shifting back gradually toward more normal purchasing patterns.

On the contrary, FXStreet’s Yohay Elam cites chances of a disappointment,

High expectations imply the potential for disappointment and as mentioned earlier, the YoY figures may provide a reality check as well. Moreover, GBP/USD faces several headwinds that may slow any recovery, even if monthly consumption leaps.

Technically, GBP/USD eases from the intraday high of 1.2774 to 1.2737 while heading into the London open on Friday. The pair earlier surged to the highest since June 10 while keeping its run-up past-200-day SMA. However, upside momentum fizzles amid cautious trading ahead of the key data as well as important resistance line stretched from March 12, currently around 1.2800. Though, sellers will wait for a daily closing below 1.2700 to take fresh entries with the early-month high around 1.2670 and 61.8% Fibonacci retracement level of March month’s fall, at 1.2517, on radars.

Key notes

UK Retail Sales Preview: Comeback continues? Yearly figures, headwinds, could keep cable depressed

GBP/USD Price Analysis: Bulls battle 1.2800 while refreshing six-week high

GBP/USD Forecast: Brexit woes cap the upside

About the UK Retail Sales

The retail sales released by the Office for National Statistics (ONS) measures the total receipts of retail stores. Monthly percent changes reflect the rate of changes in such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. Generally speaking, a high reading is seen as positive, or bullish for the GBP, while a low reading is seen as negative or bearish.

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