UK Retail Bounces Back While US Sales Stronger Than Expected
UK Retail Sales and Market Impact
UK retail sales data for July came in as expected showing a 0.5% increase month-over-month. This data has supported the pound pushing GBP/USD above 1.2850. But with political uncertainties following the recent general election where Labour won a historic victory could weigh on the pound moving forward (Wikipedia).
U.S. Retail Sales Continue to Support the Dollar
Yesterday U.S. retail sales for July significantly outperformed expectations jumping by 1% compared to the forecast of 0.3%. This strong consumer demand has bolstered the U.S. dollar reinforcing its strength against most major currencies. The retail performance combined with lower-than-expected jobless claims signals continued resilience in the U.S. economy (FX Empire) (S&P Global).
Major Currency Pairs
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EUR/USD: The euro is trading with slight gains, hovering just below the 1.1000 mark. The pair’s movement is largely driven by a softer dollar in the wake of the retail sales data. However the euro’s upside remains capped.
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GBP/USD: The pound has risen above 1.2850, buoyed by positive retail sales data and anticipation of further economic recovery in the UK. (S&P Global).
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USD/JPY: The yen has weakened significantly with the USD/JPY pair surging above 149.00. This move follows upbeat U.S. data, including the strong retail sales, which has reinforced expectations of continued Federal Reserve tightening (S&P Global).
Commodities
Oil: Crude oil prices have declined, with WTI nearing $76.00 per barrel. The drop is driven by easing supply concerns and a rise in U.S. oil inventories, which have alleviated some of the upward pressure on prices seen earlier in the month.
Gold: Gold prices are currently flat, trading above the $2,450 mark. The precious metal remains on track for modest weekly gains, supported by global economic uncertainties, though gains have been limited by a stronger U.S. dollar (S&P Global).
Political News
In UK politics, Labour’s recent landslide victory in the July 4, 2024, general election marks a significant shift. Keir Starmer has replaced Rishi Sunak as Prime Minister, leading to a dramatic reshaping of the political landscape. The Conservatives experienced their worst defeat in modern history, losing over 250 seats. Notably, prominent figures like Liz Truss and several former cabinet ministers were ousted. As the new government settles in, all eyes are on how Labour will address the economic challenges ahead, particularly with upcoming international events like the NATO summit (Wikipedia) (The Times & The Sunday Times) (The Scotsman).