Overnight, the U.K. reported higher than expected retail sales (APR):
Y/Y Actual: 2.8% Survey: 2.5% Prior: 1.3%
M/M Actual: 1.1% Survey: 0.9% Prior: 0.2%
I might be reaching in crediting the jump in retail sales a Royal Wedding boost, but it certainly has a nice ring to it.
The news only caused a muted higher 30pip reaction which in the past would have led to over 100pips.
Bank of England (BOE) Deputy Governor Charles Bean spoke in Belfast this morning; here are some of the important key notes:
- Consumer spending to remain subdued at least through 2011, sees gradual pickup in growth
- European debt crisis could hit banks, affect the UK
- Higher inflation due to Pound, oil, and higher sales tax
- Inflation to remain elevated this year but should ease through 2012.
- See's considerable uncertainty around inflation forecast
- Inflation to return to 2% annual target over next couple of years but depending on commodity prices and whether above target (2%) inflation leads to U.K. companies to raise prices of workers to demand higher wages
The dovish comments from BOE Bean could provide an explanation as to the muted rally in GBP/USD from the better than expected retail sales.
Technically speaking there a few charts that I am monitoring at the moment:
The chart above is a 4hr chart, noting the high of the month (1.67371) and low of the month (1.61042).
I favor GBP/USD to rise back towards 1.63, hit the trend line before selling off again.
The chart above is a GBP/USD shown with a weekly time frame, which indicates a strong support trend line to the upside.