Retail sales dropped by 0.8% m/m in the UK, much worse than -0.1% expected and with a downward revision. Year over year, sales are up only 1.2$ against 2.1% expected. Excluding fuel, sales are down 0.7% instead of +0and up only 1.6% y/y instead of 2.4% predicted. Downward revisions accompany all the numbers.
GBP/USD is down to 1.3140 in the immediate aftermath. The pair was challenging resistance at 1.3230 earlier in the day, and that line certainly rejected the pair’s rise.
The pound had already suffered this week. Governor Mark Carney did not show enthusiasm for raising rates apart from the well-telegraphed hike in November. He may have good reasons, according to the data published today. On the other hand, inflation reached 3% and wages came out slightly better than expected.
Yet the biggest elephant is Brexit. May’s trip to Brussels did not go down quite well, to say the least. The EU is unlikely to open talks on future arrangements before Britain pays the “divorce bill”.
Further support is quite close, at 1.3130. The next level to watch out for is 1.3030.