UK Spending Dips In June By 0.5%
Cable has taken out the 1.3000 level in response to the retail sales data for June. After a couple of strong months in April and May, forecasters were looking for some stabilisation in spending with the hot weather and World Cup expected to have been supportive. However, looking for a modest 0.1% rise, the dip of 0.5% is a clear disappointment, though the question is whether this will develop into a series of weakness in consumer spending and will this put off the BoE from hiking rates in August.
Early days as yet, though looking back at the data on the week, inflation was lower while earnings growth has stabilised also. Odds for an August hike are relatively high at close to 80%, so there is scope for disappointment here and we only have to look back to March to see how this played out in the GBP pairs.
Later today we also have the meeting between the new Brexit Sec Raab and EU's Barnier. While this is not a formal discussion on trade, headlines could be influential with GBP under the cosh again.
Cable support comes in at the 1.2970-40 area initially, and the stop chase through the figure has seen this held for now. EUR/GBP has also made a clean break of the 0.8900-20 area with 0.9000 very much on the cards now.