Pound Higher After Solid U.K. Retail Sales, Barnier's Comments
18 July 2019 - 04:46PM
RTTF2
The pound spiked higher against its major counterparts in the
early European session on Thursday, as U.K. retail sales recovered
unexpectedly in June and the European Union's Chief Brexit
negotiator Michel Barnier suggested that he is open to work on
alternative plans for the Irish border.
Data from the Office for National Statistics showed that retail
sales volume increased 1 percent month-on-month in June largely
driven by non-food product sales. Sales were forecast to fall 0.3
percent after easing 0.6 percent in May.
Likewise, sales excluding auto fuel, expanded 0.9 percent after
falling 0.4 percent each in May and April. Economists had forecast
a 0.2 percent drop for June.
On a yearly basis, growth in retail sales accelerated to 3.8
percent from 2.2 percent in May. The rate also exceeded the
expected rate of 2.6 percent.
Excluding auto fuel, retail sales climbed 3.6 percent after
expanding 2 percent in the previous month. Economists had expected
an annual growth of 2.6 percent.
Speaking to BBC Radio 4, Barnier said that the deal negotiated
by May was the only option available for an orderly exit, but the
EU is willing to negotiate on possible alternative arrangements for
Irish border.
His remarks came after the UK's House of Lords passed an
amendment to prevent the PM from suspending the Parliament until
October 31, the Brexit day.
The legislation should be approved by the House of Commons to
become a law. If passed, the legislation would prevent the PM's
readiness to dissolve the parliament to push through a no-deal
Brexit.
The currency traded mixed against its major counterparts in the
Asian session. While it fell against the franc and the yen, it was
steady against the euro. Against the greenback, it gained.
The pound climbed to a 2-day high of 0.8999 against the euro,
from a low of 0.9039 hit at 8:45 pm ET. Next key resistance for the
pound is seen around the 0.88 region.
Having dropped to 1.2422 against the greenback at 5:30 pm ET,
the pound reversed direction and rose to a 2-day high of 1.2486.
The pound is likely to find resistance around the 1.27 level.
The pound appreciated to 134.53 against the yen, following a
decline to a 6-1/2-month low of 133.85 at 9:00 pm ET. If the pound
rises further, 136.5 is seen as its next resistance level.
Data from the Ministry of Finance showed that Japan posted a
merchandise trade surplus of 589.5 billion yen in June.
That exceeded expectations for a surplus of 403.5 billion yen
following the 968.3 billion yen deficit of May.
The pound strengthened to a 2-day high of 1.2303 against the
franc, reversing from a low of 1.2248 set at 3:00 am ET. On the
upside, 1.25 is possibly seen as the next resistance for the
pound.
Looking ahead, U.S. weekly jobless claims for the week ended
July 13 and leading indicator for June are set for release in the
New York session.
Federal Reserve Bank of New York President John Williams will
speak about monetary policy at the Annual Meeting of the Central
Bank Research Association in New York at 2:15 pm ET.
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