When are the UK retail sales and how could they affect GBP/USD?


UK Retail Sales Overview

Having witnessed upbeat inflation numbers for December on Wednesday, GBP/USD traders are waiting for Friday’s UK Retail Sales, to be published at 07:00 GMT, for fresh impulse. The key data to British GDP, Retail Sales, is expected to rise from -3.8% prior contraction to +1.2% % MoM in December. The same is likely to help total retail sales that are seen rising from 2.4% to 4.0% over the year in the reported month.

Additionally, core retail sales, stripping the basket off motor fuel sales, are also likely to print upbeat readings with +0.8% MoM and +7.0% YoY numbers compared to -2.6% and +5.6% respective priors.

It should be noted that the preliminary readings of the UK’s Manufacturing and Services PMIs for January, up for publishing near 09:30 GMT Friday, also become important data for the Cable traders.

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.

fxsoriginal

How could it affect GBP/USD?

GBP/USD fails to cheer the US dollar weakness during early Friday as the coronavirus (COVID-19) fears do probe the bulls near the highest since May 2018. The quote snaps four-day winning streak, currently down 0.18% near 1.3712, amid chatters over the British policymakers' push to UK PM Boris Johnson for complete closure of national boundaries.

While the covid woes can join the Brexit disappointment to probe the GBP/USD buyers, a sustained run-up in the Retail Sales will amplify the early-week inflation data and back BOE Governor Andrew Bailey’s rejection to the negative rates.

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

We look for a -0.3% m/m decline (market forecast +0.6%), on the back of the -3.8% drop in November. There's a huge amount of uncertainty though, as the end of the year was a complex time for retailers, bouncing between a 'lite' lockdown in November, a limited re-opening in early December, and then another shutdown in large parts of the country at the end of the month as the new Covid variant saw the government moving quickly to tighten restrictions. The impact on food store sales, which comprise about 40% of UK retail sales, is especially uncertain, due to strict limits on gatherings over Christmas. It's unclear how the downside impact from no big Christmas or New Year's Eve celebrations balanced out against the upside to food store sales from restaurants being closed (so more eating at home), and the fact that there would have been many more single-household celebrations (fewer big turkeys, more turkey crowns). We suspect that the net impact would have been negative, which is the main driver of our below-consensus forecast.

Technically, multiple tops marked during January highlight the 1.3700 as the key immediate support whereas the weekly rising trend line near 1.3685 adds to the downside filter. Meanwhile, the 1.3800 lures GBP/USD bulls if at all they manage to return.

Key notes

GBP/USD stays above 1.3700 despite looming border close in Britain, eyes UK Retail Sales, PMIs

 

GBP/USD Forecast: Bulls not ready to give up

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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