An excellent retail sales report from the UK: a rise of 1% m/m, on top of a significant upwards revision. Year over year, sales are up 2.4%, more than double the early expectations. Excluding fuel, sales are up 1% m/m and 2.8% y/y, also much better than expected.
All in all, the big rise in sales in August, that comes on top of upwards revisions for July, will likely lift Q3 GDP growth. In turn, it increases the chances for a rate hike from the Bank of England in November.
GBP/USD jumps and nears 1.36. The high so far is 1.3593. Update: the new high is already 1.3607.
The UK was expected to report a rise of 0.2% in the volume of retail sales in August, after 0.3% in July. Year over year, sales were projected to slide from 1.3% to 1.1%. Excluding fuel, core sales were predicted to pick up by 0.2% m/m and 1.4% y/y.
GBP/USD was trading at around 1.3520 ahead of the publication. It was quite steady, as tension mounts towards the Fed decision later today.
Fed Preview: a window to short the dollar and two other scenarios
In the UK, the main news is that Theresa May may be willing to offer a payment of around 20 billion euros in the Brexit negotiations. Foreign secretary Boris Johnson grabbed the headlines after expressing his own policy suggestions regarding Brexit and also mused about life after politics.
More: GBP: 3 Reasons For Downside Risks But Won’t Fight Against N-Term Strength – Barclays
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