Forex: Volatile day for GBP/USD

_iNVEZZ.com Wednesday July 3rd:_ At the start of today’s Asian trading, UK shop prices for June were reported to have declined 0.2 percent on an annual basis from 0.1 percent in May, a fall for the second consecutive month and the biggest monthly drop since February 2007. There was nevertheless little impact on the GBP/USD at the time.

Helen Dickinson, British Retail Consortium Director-General, observed: “The deflation is driven entirely by non-food, a reflection that the summer sales are well underway as retailers battle it out to shift stock and compete for customer spending. Food inflation has edged up marginally since the near three-year low seen in May, driven by slight increases in ambient and fresh food prices. However, I would expect it to remain fairly stable over the medium term.“

Subsequently though, in the day’s early European trading, sterling fell to 1.5128 against the US dollar, its lowest exchange rate since May 30.
The Markit UK Services PMI reading for June came out at 09:30 BST today, showing a rise to a seasonally adjusted 56.9 in June from May’s reading of 54.9 and indicative of solid expansion in Britain’s services sector.

Markit chief economist Chris Williamson observed: “The buoyant picture for June means the economy is on course to expand by at least 0.5% in the second quarter, with more growth to come. With growth this strong it’s hard to see how any of the members of the Monetary Policy Committee could make a case for further quantitative easing.”
The pound firmed against the dollar on the positive news and the pair has retraced to 1.5230, up 1.02 percent from its low for the day so far.