News Column

Pound Slides As UK Retail Sales Grow Less-than-expected

July 24, 2014

BRUSSELS (Alliance News) - The pound weakened against the other major currencies in the early European session on Thursday, after data showed that the nation's retail sales rose less-than-expected in June.

Data from the Office for National Statistics showed that UK retail sales increased marginally in June as food sales recovered from the prior month.

Retail sales including auto fuel rose 0.1% in June from May, when it dropped 0.5%. Sales were expected to grow by 0.3%.

However, excluding auto fuel, sales were down by 0.1%. Economists had expected sales to rise 0.3% after falling 0.5% in May.

On a yearly basis, growth in retail sales volume including auto fuel, slowed slightly to 3.6% from 3.7% in May. Excluding auto fuel, sales growth fell to 4% from 4.5%.

The pound fell to more than a 3-week low of 1.7008 against the US dollar, from an early high of 1.7052. At yesterday's close, the pound was trading at 1.7041 against the greenback. On the downside, 1.69 is seen as the next support level for the Sterling.

Pulling away from an early high of 0.7887 against the euro, the pound slipped to a 3-day low of 0.7925. The pound closed yesterday's deals at 0.7898 against the euro. The next possible downside target for the pound lies around the 0.798 level.

The Eurozone private sector growth rebounded in July from a six-month low, flash survey data from Markit Economics showed. The flash composite output index rose to 54 in July from 52.8 in June. A reading above 50 indicates expansion in the sector. Economists had forecast the score to remain unchanged at 52.8.

Moving away from an early high of 1.5394 against the Swiss franc, the Sterling fell to a 3-day low of 1.5323. At yesterday's close, the pound was trading at 1.5374 against the franc. Continuation of bearish trend may lead the Sterling to a support around the 1.52 mark.

Against the yen, the pound fell to 172.61 from an early high of 173.03. The pair was quoted at 172.92 at yesterday's close. If the pound continues slide, it may find support around the 171.96 zone.

The expansion in Japan's manufacturing sector slowed slightly in July, Markit Economics said in its preliminary report. The manufacturing purchasing managers' index came in with a score of 50.8. That was shy of forecasts for 52.0, and was also down from 51.5 in June. Looking ahead, US weekly jobless claims for the week ended July 19, Markit's preliminary US manufacturing PMI for July and new home sales for June are due to be released in the New York session.

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Source: Alliance News

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