UK Retail Stats Ensure GBP/EUR Consolidates Ground North of 1.17
The Pound Sterling has moved higher to cement ground above the 1.17 level in mid-morning trade.
GBP Boosted by Strong Retail Sales Numbers
Following on from yesterday's positive employment stats fresh impetus has been granted to Sterling courtesy of UK Retail Sales data which came in 1.1 pct higher (MoM), well ahead of forecasts for 0.6 pct; year-on-year figures were at 3 pct vs expectations of 2.5 pct.
Retail Sales Ex-Fuel were at 3.1 pct YoY versus expectations for 2.7 pct.
"Forecasters predicted big things for July’s retail sales figures and just like the British summer this year, we’ve not been disappointed," says Chris Masterson, director of Mesh Marketing, "consumers, heartened by the growth in positive economic news and encouraged by the good weather, have been reaching much deeper into their pockets."
Euro Pound Exchange Rate (EUR/GBP) Forecasted Lower
Our latest technical analysis of the Euro to Pound exchange rate favours further Pound gains.
ICN Financial Markets tell clients:
"The pair dips sharply lower, settling below 0.8580 support level and the 50-days SMA, accordingly flipping the bias to bearish, eying a retest of 0.8465 major low as an initial downside target, and probably lower towards the main ascending trend line near the 200-days SMA."
Luc Luyet at MIG Bank is backing a testing of lower levels in EUR/GBP:
"EUR/GBP continues to trade in a messy haphazard way, making trade location difficult and price action also difficult to read. However, the daily chart still looks minorly bearish, with scope for a retest of the rising trend line from 0.7755 (23/07/2012 low).
"Failure there would then open up a return to the 200 day moving average, currently at 0.8450." (Click the graph thumbnail to see what Luc is getting at!).
The Euro: EZ Out of Recession, Investors Still Worried About Unemployment Though
Turning to the fundamentals and the EUR side of the Pound to Euro equation, we note news of the end of the recession has failed to provide much upside impetus to the shared currency.
Kathy Lien at BK Asset Management talks us through the last 24 hours for the euro exchange rates:
"According to the latest Eurozone GDP figures, the region is technically out of recession. After contracting for 6 straight quarters, the economy finally managed to expand by 0.3% in Q2.
"Thanks to improved weather conditions and faster industrial production stronger growth was reported in both Germany and France. While Germany never fell into a recession in this cycle, France did and managed to rise out of it in Q2. Unfortunately the euro received no support from the stronger GDP reports.
"The problem is that investors are still worried about the high level of unemployment, drag from fiscal consolidation and tight credit conditions.
"Recent economic data, particularly out of Germany have been good but in their latest monthly bulletin released last week, the ECB predicted that Euro-zone growth will contract by 0.6% in 2013, down from than their prior outlook of -0.4%. GDP is also predicted to rise 0.9% in 2014, less than the previous estimate of 1%.
"In response to these weak projections, the ECB will be forced to keep interest rates low for the foreseeable future. Based on these reports, the economy could be performing better than the central bank's projections but only time and further PMI reports will tell."