Join our community of traders FOR FREE!

  • Learn
  • Improve yourself
  • Get Rewards
Learn More

GBP/USD preserved gains after strong UK retail sales

OB-WN555_pound0_G_20130301063433British pound rose sharply against the US dollar on Thursday, reaching four-week highs, following a report to show that retail sales in the United Kingdom increased more than projected in September.

GBP/USD climbed to a session high at 1.6096 at 9:30 GMT, also the pairs highest point since September 19th, after which consolidation followed at 1.6080, gaining 0.83% for the day. Support was likely to be received at current session low, 1.5941, while resistance was to be met at September 19th high, 1.6146.

The Office for National Statistics (ONS) reported that retail sales in the United Kingdom rose at a faster pace than expected in September, as this implied a retained optimism over nations economic development during the third quarter of the year. Retail sales increased 0.6% in September on a monthly basis, exceeding preliminary estimates of a 0.4% gain. Augusts result has been revised to a 0.8% drop from a 0.9% drop previously. Annual retail sales climbed 2.2% in September, following the 2.1% gain in August. Retail sales excluding fuel rose 0.7% in September compared to August, again outstripping expectations of a lesser rate of increase, 0.3%. On annual basis, the indicator rose 2.8%, which was above the expected rate of 2.2%. According to ONS, furniture sales contributed the most the overall results in September, probably due to the recovery in UK housing market.

“There’s a lot of bullish sentiment towards the pound,” said Kathleen Brooks, European research director at in London, cited by Bloomberg. “It’s being driven by a weak tone in the dollar combined with the U.K. data. We could retest the high from early October at $1.6260.”

At the same time, the Bank of England may raise its benchmark interest rate as soon as next year, according to Chief Economist Spencer Dale. “Conceivably it could be 2014,” he said in an interview with the Guardian newspaper. “But it would have to be in a world where you had quite strong growth, perhaps stronger than you have got now, and a recovery in productivity weaker than I would expect.”

Meanwhile, the US dollar remained broadly weaker, as concerns appeared over the possible consequences to US economy after 16 days of partial government shutdown. Uncertainty resulting from continued political disruption suggested a slower pace of monetary stimulus tapering by the Federal Reserve Bank. There were expectations that the central bank will probably not consider a reduction of scale of its asset purchases at the upcoming policy meeting on October 30th. At the same time, a weakened consumer confidence may lead to “more of a drag” on economic growth than expected during the final quarter of the year. Another concern was the fact that this temporary solution on the fiscal issue does not resolve the underlying budgetary issues, which divide Republicans and Democrats in the United States.

The agreement on debt provides government funding at Republican-backed spending levels through January 15th 2014, and also suspends the debt ceiling through February 7th.

Elsewhere, the pound was slightly higher against the euro, with EUR/GBP cross dipping 0.08% to trade at 0.8479 at 12:14 GMT. GBP/JPY pair was gaining 0.06% on a daily basis to trade at 157.67 at 12:16 GMT. is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action and Social Trading.

Related News