UK retail sales fall but was expected - all eyes now on BoE
This morning's release of May retail sales saw spending falling by 0.5%, but this was priced into to expectations, with the fall in core spending a little less the forecast. There was little or no reaction to GBP however as we have the BoE meeting later today and traders do not want to be caught offside on any hawkish talk - as has been seen in recent weeks from certain MPC members.
Saunders is a hawkish member and has been advocating a hike in recent weeks, with the BoE governor Carney also suggesting that price pressures may warrant some tightening. However, market expectations are low for as long as the Brexit picture remains clouded, with the central bank unlikely to tip the balance until we get some clarity on how the UK exits the EU.
Later today, the final two candidates will be decided as the fourth vote will eliminate another two MPs - Johnson, Hunt, David and Gove in the running, but Johnson all but certain to go through.
Cable has benefited from the USD sell-off seen in the wake of the FOMC meeting last night, but we are coming up against some key resistance into 1.2750 and only a clear break of 1.2800 will suggest there is viable upside from current levels.
EUR/GBP is also holding off 0.8870, which has proved a strong sticking point in the past few weeks, and even a move below here brings us into contact with move congestion in the 0.8840-25 area.