Trading the News: U.K. Retail Sales
The U.K. Retail Sales report may keep GBP/USD[1] under pressure as the headline reading for household spending is expected to contract 0.4% in April.
Signs of a less robust economy may produce headwinds for the British Pound as it encourages the Bank of England (BoE) to retain a wait-and-see approach for monetary policy. The central bank may come under pressure to abandon its rate hike bias as ‘quarterly growth is expected to slow to around 0.2% in Q2.’
With that said, a decline of 0.4% or greater may trigger a bearish reaction in GBP/USD, but a positive development may curb the recent decline in the Pound Dollar exchange rate as Governor Mark Carney & Co. insist that ‘were the economy to develop broadly in line with its Inflation Report projections, an ongoing tightening of monetary policy over the forecast period, at a gradual pace and to a limited extent, would be appropriate to return inflation sustainably to the 2% target at a conventional horizon.’
Keep in mind, headlines surrounding the Brexit negotiations may produce increased volatility in GBP/USD as Prime Minister Theresa May[2] struggles to secure a deal.
Impact that the U.K. Retail Sales report had on GBP/USD during the last print
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