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Sterling Dips Following UK Retail Sales Miss
Sterling has traded lower following a weaker than expected UK retail sales. Cable logged a new intraday low at 1.4959, though has since settled higher, back toward 1.5000. Cable resistance is marked at 1.5000 and 1.5030 which coincides with the 50-day moving average. The May 7 UK election should be a consideration for sterling investors and traders given prevailing outcome uncertainties.
UK March retail sales unexpected fell 0.5% month over month, contrary to the median forecast for a 0.4% month over month increase. The year over year figure came in with a 4.2% gain, down on the median for a rise of 5.7%. February data were also revised lower, to 0.6% month over month from 0.7% and to 5.4% year over year from 5.7%. The ex-fuel figure dipped to +0.2% month over month, below the median for 0.4% growth and down on 0.7% in February. The three-month on three-month comparison ebbed to 0.9% growth, which is the slowest since the three months to October last year.
Overall, a disappointing report, though underlying momentum remains good and trending improvements in real wages on the back of a strengthening labor market suggest the outlook will remain pretty solid. A sharp 6.2% month over month drop in petrol station sales accounted for the lion’s share of the drop in the month over month headline. March marked the 24th consecutive month of year over year growth, the longest sustained period of year over year growth since May 2008.
Support on the GBP/USD currency pair is seen near the 10-day moving average at 1.4863, which resistance is seen near a downward sloping trend line that connects the March 17 high to the April highs and comes in near 1.5090. Momentum remains positive with the MACD (moving average convergence divergence) index printing in positive territory with an upward sloping trajectory.
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