FXstreet.com (Córdoba) - The Pound weakened across the board on Friday after a report showed that retail sales in UK grew at a 0.3% during December, the market had expected an increase of more than 1%. Cable is falling considerably against the Yen and the Euro for the second day in a row.
GBP/JPY tumbled to 144.80 reaching the lowest price in a month. The pair is extending its decline after closing yesterday below 146.50, breaking a range in which the pair traded most of January. To the downside support lies at 144.20/30 and below at 143.20 (Dec 14 low) and 142.00 (Dec 9 low).
The Euro is rising for the second day in a row against the Pound accumulating an increase of 115 pips. EUR/GBP decline from 0.9025 found support at 0.8650. Cable lost strength and the Euro recovered part of the lost ground.
EUR/GBP jumped from 0.8685 to 0.8777 (intra-day high). The pair currently trades at the highest level of the day, 0.91% above today's opening price.
With the beginning of the New Year, the EUR has been trading in a downward trend versus the GBP. Yesterday, the currency pair could recover at its Pivot point (0.8677) and the prices started a pull back, the Varengold Bank Research Team said. The MACD indicator may support a continuing bullish trend for the EUR with a breakthrough by the signal line from below according to the Varengold Team. Next resistance could be around 0.8807.
Weak retail sales
In year-over-year terms, retail sales only grew 2.1% in December, marking a 11-year low in sales growth for the holiday season. This is a drop from November's annual positive annual growth of 3.1% and far behind market forecasts of more robust annual growth in the range of 3.0%.
The report confirms that growth is anemic in the British economy and mirrors the message from weak bank lending data also released this week. It's also a comfort to note that the earlier inflation data is precisely what the Bank of England voiced after the report when governor King blamed the spike in prices on temporary factors, Andrew Wilkinson, analyst at Interactive Brokers said.