Dailyfx | Mar 26, 2015 03:33AM ET
- U.K. Retail Sales to Pick Up for First Time Since November.
- Will Lower Energy Prices Boost Private-Sector Spending?
Trading the News: U.K. Retail Sales
A 0.4% rebound in U.S. Retail Sales may improve the British Pound’s appeal and generate a more meaningful rebound in GBP/USD as it puts increased pressure on the Bank of England (BoE) to normalize monetary policy.
What’s Expected:
Why Is This Event Important:
Prospects for a stronger recovery may prompt an increased number of BoE officials to adopt a more hawkish tone for monetary policy, and we may see Governor Mark Carney continue to prepare U.K. households and businesses for higher borrowing-costs as the central bank turns increasingly upbeat towards the economy. However, with the May election quickly approaching, the Monetary Policy Committee (MPC) may continue to endorse a wait-and-see approach going into mid-2015 amid the risk for a material shift in fiscal policy.
Expectations: Bullish Argument/Scenario
Release |
Expected |
Actual |
Consumer Price Index Core (YoY) (FEB) |
1.3% |
1.2% |
Employment Change (3Mo3M) (JAN) |
130K |
143K |
BRC Shop Price Index (YoY) (FEB) |
-1.2% |
-1.7% |
Easing consumer prices paired with the pickup in job growth may encourage a strong rebound in household spending, and a positive development may produce a more meaningful correction in GBP/USD as it boosts interest rate expectations.
Risk: Bearish Argument/Scenario
Release |
Expected |
Actual |
Average Weekly Earnings in Bonus (3MoY) (JAN) |
2.2% |
1.8% |
Net Consumer Credit (JAN) |
0.9B |
0.8B |
GfK Consumer Confidence (FEB) |
2 |
1 |
However, the ongoing weakness in wage growth along with the slowdown in private-sector credit may drag on household spending, and another dismal retail sales report may heighten the bearish sentiment surrounding the sterling as the near-term outlook remains clouded by the May elections.
Bullish GBP Trade: Retail Sales Expands 0.4% or Greater
Bearish GBP Trade: Household Spending Disappoints
Read More here
Potential Price Targets For The Release
h2 GBP/USD Daily Chart/h2Chart - Created Using FXCM Marketscope 2.0
Impact that the U.K. Retail Sales report has had on GBP during the last release
Period |
Data Released |
Estimate |
Actual |
Pips Change (1 Hour post event ) |
Pips Change (End of Day post event) |
JAN 2015 |
02/20/2015 9:30 GMT |
-0.2% |
-0.3% |
+12 |
+16 |
January 2015 U.K. Retail Sales
U.K. Retail Sales slipped another 0.3% in February after contracting a revised 0.1% the month prior. The ongoing weakness in private sector-consumption may encourage the Bank of England (BoE) to further delay the normalization cycle as the entire committee now favors a wait-and-see approach, and the British Pound remains at risk of facing additional headwinds over the near-term as the May election clouds the outlook for fiscal policy. The market reaction was short-lived as GBP/USD held its ground throughout the North American trade to end the day at 1.5399.
Original post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.