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21/06/24
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GBP/USD Trading Downward Despite a Significant Increase in Retail Sales
At around 1:30 pm (GMT) on June 21, GBP/USD was trading at 1.26413, representing a 0.12 percent decline on the day. The slight move to the downside came as the UK’s Office for National Statistics revealed that retail sales rose 2.9 percent on monthly basis last month, having declined by 1.8 percent in the previous month. This represents a 6-month high.
On a yearly basis, retail sales rose 1.3% relative to a forecast of – 0.9%, representing a rebound from a revised 2.3% decline two months ago as well as the steepest rise in twenty-seven months.
Consumer spending increments affected the entire economy, with a rise in wages helping consumers cope with high interest rates and weak economic growth. April witnessed wet weather, dampening retail sales, but there was a rebound last month as the UK recorded the warmest weather in history.
According to additional data, Britain’s GfK Consumer Confidence rose from -17 in May to -14 in June, relative to a -17 forecast. The confidence index has risen for three consecutive months, reaching its highest level in 55 months, despite consumers remaining pessimistic.
On June 20, the UK’s apex bank kept the benchmark rate unchanged at 5.25%, representing the eighth consecutive time. There was an update to the Bank of England’s growth forecast for Q2 2024 and some analysts believe that expecting an improvement could prompt a rate cut in August.
The UK’s inflation rate fell to 2% which is the apex bank’s target, representing the first time in 3 years. Unfortunately, service inflation is at 5.7 percent and needs to be reduced prior to rate cuts.
A look at the chart of GBP/USD shows there was a visit to the support level at 1.2633 and there is another support level at 1.2608. On the other hand, the pair will encounter two barrier levels on the way upward, including 1.2679 and 1.2704.
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