Forex: GBP/USD – Down on weak UK inflation and retail sales updates

on Jul 16, 2013
Listen Tuesday July 16th: Sterling was up against the dollar in Asian trading today, on the back of yesterday’s weak US retail sales numbers. But since the European opening, the pair has retraced from an intraday high at 1.5144 to be down sharply at 1.5045, thanks to mediocre UK inflation data.

US retail sales expanded by just 0.4 percent last month m/m, only half-way towards expectations for an increase of 0.8 percent, and down on May’s 0.5 percent growth. Without automobiles, the m/m change was zero, missing expectations for a 0.4 percent rise and down from +0.3 percent in May.
And earlier today the UK’s National Statistics Agency reported that annual inflation in Britain rose by 2.9 percent in June, following the 2.7 percent growth registered the previous month. Analysts had been expecting an increase of 3 percent. On a monthly basis the CPI fell by 0.2 percent in June, after climbing 0.2 percent in May and versus forecasts of a 0.1 percent drop. Year-on-year Core CPI grew by 2.3 percent, up from 2.2 percent in May and in line with forecasts.

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Separately, the UK Retail Price Index rose by 3.3 percent in June y/y, up from the 3.1 percent increase registered the previous month. Analysts had expected a rise to 3.4 percent. On a monthly basis the UK Retail Price Index fell by 0.1 percent, as against the prior month’s 0.2 percent rise and forecasts for no change.
The Bank of England is tomorrow due to publish the minutes of its most recent policy meeting, which ought to reveal how MPC members voted at new governor Mark Carney’s first meeting at the helm.
The US Consumer Price Index update is scheduled for release at 13:30 BST, followed by the Redbook Index, Net TIC Flows and Industrial Production data, all around 14:00 BST. Positive numbers will add substance to the USD’s current muscle against sterling and other majors.