Impact of UK Retail Sales Decline on GBP: Analyzing Trends
This morning, Japan reported its June inflation data; the overall consumer price index moved 2.8% year-on-year, on par with the previous month and in line with expectations. With such consumer price increases being driven by energy and food, that lends more probability to the recent speculations around further policy adjustments from the Bank of Japan. (Statistics Japan) (FX Empire).
- UK Retail Sales: Just out, UK retail sales for June plunged sharply by 1.2% MoM, way below the expected –0.4% and far off from the 2.9% rise the previous month. Such a decline would point out the challenges to consumer spending and, therefore, weigh on the GBP.
ECB Interest Rate Decision: Yesterday, the European Central Bank chose to keep interest rates unchanged at 4.25%. This was in line with market expectations. In its post-meeting statement, the ECB said it would continue to monitor the inflationary pressure and would further act in case there is a risk to price stability. The market now awaits the September meeting for further action or guidance. (DailyFX).
Major Currency Pairs
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- EUR/USD: The single currency remains on a stable footing against the USD as traders look for more economic indicators and geopolitical events to further determine the pair’s direction.
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- GBP/USD: The British Pound holds quite well versus the USD but has some resistance near big figures. Today, the UK data on retail sales will decide further directions of this pair.
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- USD/JPY: The yen is seeing mixed performance on the back of the latest inflation data, which, more or less, heightens expectations of potential Japanese authority intervention.
Commodity Prices
- Oil: Prices of US crude remain bearish at the moment, as traders become wary of more economic data and geopolitical developments that may give a clearer view of the future in terms of demand.
- Gold: Gold prices are edging closer to its all-time high on expectations of a September rate cut by the Fed. The precious metal still is under a safe-haven investment with uncertainties looming large over the global economy.
Political and Economic News
US Political and Economic Developments: The US is focusing on its economic policy as several Federal Reserve officials commented on the outlook recently. Fed’s Barkin suggested that it would be appropriate for the US Central Bank to go slow on cutting interest rates, reflecting some cautious optimism regarding returning inflation to target levels. On the other side, Fed’s Mester commented that while the economy and monetary policy were in good shape, further clues were needed to support that inflation was on its way down.
Global Market Sentiment: Investors worldwide are closely monitoring the geopolitical tensions and events that may hit the stability of the markets. This includes the dialogue on energy security, in the wake of occurrences hitting hard at oil prices and supply chains. A cautious optimism reflects the market sentiment as central banks globally balance stimulating growth against controlling inflationary pressures.