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Forex News: Sterling Decline Continues on Disappointing Retail Sales
THE TAKEAWAY: UK retail sales decline 0.3% in December, disappointing expectations for a rise -> BoE says economy may contract in Q4 -> Sterling continues decline
UK retail sales (excluding auto fuel sales) returned to a decline in the December month despite the Christmas season, according to the UK Office of National Statistics. The 0.3% decline in sales disappointed expectations for a 0.1% rise and was a reversal from November’s revised 0.2% rise in retail sales. Retail sales were 1.1% higher than December 2011.
Including auto fuels, retail sales only decreased by 0.1% in December. The estimated amount spent weekly on retail sales in December was 8.5 billion Pounds. Online sales increased by 1.2% from December 2011. Prices in the retail sector increased by 0.6% over December.
The Bank of England recently said that despite the economic growth seen in Q3, the UK economy may return to contraction in Q4. Today’s retail sales release fails to indicate a continuation of economic growth in the final quarter of last year. A sign of economic growth would be Sterling positive.
The British Pound continued a decline following the disappointing retail sales. There are no other new catalysts in today’s session to explain the previous decline in Pound, but issues like the possible referendum to leave the European Union and the upcoming appointment of Mark Carney as BoE governor may be weighing on Cable. The Pound is currently trading slightly below 1.5950 against the US Dollar in currency markets. Resistance may now be seen by the key 1.6000 figure, and support may be seen by a previous support line around 1.5906.
GBPUSD Daily: January 18, 2013
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to bbspier@fxcm.com .
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