Sterling Moves Higher After Strong Retail Sales
The Pound moved higher on Friday on the back of better than expected retail sales data which pushed UK yields higher relative to their US counterparts. The Senate on Thursday approved a budget which took some of the fear out of dollar investing, but not enough to improve gains against most major currencies.
Cable moved up by more than a big figure in response to news of surprisingly strong UK retail sales increase of 2.6% month over month. The consensus forecast was for less than 0.5%. On a year over year basis, the 5.3% increase is the best nearly 10-years. Sterling itself had made new lows for the week earlier in the session, near $1.6300. Large stores in the UK underperformed their smaller rivals. Sales at the large stores rose 2.6%, compared to small store which climbed 8.1% on a year over year basis. Internet sales accounted for 11.8% of all UK retail sales in December, up from 10.9% in December 2012.
On the US side of the pond, the Senate has voted by 72-26 to approve the $1.01 trillion budget to finance the government through September 30, 2014. With the House having passed the measures earlier this week, it will go to President Obama for his signature. Congress now has around six weeks to lift or suspend the $16.7 trillion debt limit.
Sterling moved back through resistance near the 10-day moving average and is poised to test the recent highs near 1.66. Support on the currency pair is seen near the recent lows at 1.6320. Momentum as reflected by the MACD is negative with the index printing in negative territory. The trajectory of the MACD is flatting. The relative strength index (RSI) moved higher with price action reflecting accelerating upward momentum. The RSI is printing near 55, which is in the middle of the neutral range.
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