FOREX Watch: Sterling rises on retail sales
The British pound generated a strong bid Thursday as retail sales surpassed expectations. Annualized retail sales for July advanced 3.0 percent, exceeding the previous month’s growth of 1.9 percent. Pound pairs rallied on the news after declining Wednesday on weaker CPI and PPI figures.
The pound soared almost 1 percent against the greenback on the UK’s retail sector growth, sending GBPUSD to a session high of 1.5651. The pair would later consolidate at 1.5651. The pair was met with mixed data out of the US. Jobless claims for the previous week declined to their lowest levels in almost six years, a report by the US Department of Labor Statistics showed. This wasn’t enough to halt the greenback’s retreat, which was exacerbated by flat industrial production. Consumer inflation met expectations with an annualized reading of 2 percent.
The GBPUSD has entered a slightly bullish phase, extending its gains to fresh two-month highs. Concern the GBPUSD has entered an overbought situation has emerged, as each resistance level failed to curb the pair’s advance. The pair’s break above 1.5550 signals a bearish correction is likely to occur before the end of the week. The US dollar will have a chance to reassert itself Friday with the Reuters/Michigan report on consumer confidence.
The pound extended its gains on the euro, advancing 0.2 percent. The EURGBP consolidated in the middle of the daily trade range at 0.8537. The pair sunk to a session low in the late European trade before consolidating higher in the New York day. The euro was idle Thursday after failing to generate a bid on upbeat GDP data earlier in the week. The EURGBP dipped lower Wednesday following a high reading on the UK Claimant Count Change.
The outlook on EURGBP has entered a slightly bullish phase. Price action reveals an initial barrier of 0.8578. A break out above this level will expose 0.8598 and 0.8619, the one-hour timeframe analysis shows. On the downside, the pair is supported at 0.8504 and 0.8482, the lows from late-June.
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