UK retail sales strong as ever
Well, there may be lots of uncertainty in the UK over the Brexit outcome down the road, but the UK consumer is certainly not showing any of the signs as spending in headline retail rose by 1% in June, translating into an annualised rate of 3.8% vs 2.6% expected. On the month, the market was looking for a drop of 0.3% in spending, with core sales expected to fall 0.2%, but this also rose firmly by 0.9%.
Over the week, we have seen a relatively healthy set of numbers, with wage growth still on the up and now confirmed with spending, which will filter through to growth and perhaps lift some of the gloomy forecasts a little.
Earlier in the day, comments from the EU's Barnier that he may consider discussing alternative solutions to the Irish backstop gave GBP a lift this morning, but markets will take this with a large pinch of caution, so for now, Cable is resisting a move on 1.2500 as EUR/GBP also stalls ahead of 0.9000.
Should we push higher, the initial resistance level to watch for is at 1.2520 in the spot rate and a move above here would put the focus on 1.2590-1.2620 higher up - this is expected to be a very strong level, so expect staggered moves into this area.
Through 0.8990, EUR/GBP also gets interesting, with the cross rate having risen in an impulsive manner in the last 8-9 weeks, so there is certainly room here for a pullback - and one which would initially have to overcome a bank of support in the 0.8975-50 area.