Pound Climbs Versus Euro as U.K. Retail Sales Better Than SeenBy
Sterling breaks five-day decline against the common currency
Retail sales beats economists estimates, driven by food demand
The pound extended gains versus the euro on Thursday as U.K. retail sales rose more than forecast in July.
Sterling snapped a five-day decline versus the common currency after data from the statistics office showed demand for food spurred the volume of goods sold by 0.3 percent, compared with the median prediction for a 0.2 percent increase. The retail sales numbers come a day after data showed that U.K.’s unemployment rate dropped to the lowest since 1975 and wages rose more than forecast.
“It was again some good news for sterling,” said Georgette Boele, a currency strategist at ABN Amro Bank NV in Amsterdam. “The labor-market report yesterday and today’s retail sales both came in above expectations. We think that the euro across the board has risen a bit too fast and some kind of correction is on the cards, also versus the pound. So we expect EUR/GBP the grind lower if there is some profit taking in the euro.”
- EUR/GBP falls 0.2% to 0.9109, having gained 0.9% in the five days through Wednesday
- Approaching last meaningful resistance line that stands in the way of GBP ‘flash crash’ spike level at 0.9415
- Support at 0.9118, daily pivot; resistance at 0.9154, 76.4% Fibonacci of Oct.-Dec. drop
- GBP/USD steady at 1.2890; fell to 1.2842 earlier Wednesday, the lowest level since July 12
- Small bullish Wednesday session against 1.2863-48 support eases the downside pressure although downbeat mood still hangs over market
- Headlines surrounding Brexit negotiations between the U.K. and the European Union have also driven sterling. Britain is considering allowing EU citizens to travel freely within the country even after Brexit
- Yield on 10-year gilts steady at 1.10%, after climbing 4bps in the three days through Wednesday
— With assistance by Sejul Gokal