GBP/USD Forecast: Weaker retail sales send Sterling smashing 1.3000 to the downside
|- The GBP/USD is trading below 1.3000 after the UK retail sales came out below market forecast in June.
- Total retail sales fell -0.5% m/m in June while core retail sales excluding motor fuel sales decreased 0.6% m/m.
- Falling retail sales add to the uncertainty regarding the prospects for the Bank of England hiking rates in August.
Sterling is under pressure after the UK retail sales fell more than expected in June with the positive household spending related to cheerful atmosphere from English squad proceeding in the Football World Cup in Russia failed to materialize.
Total retail sales fell -0.6% over the month in June, with core retail sales excluding the motor fuel sales falling -0.5% over the month compared to an increase of 0.4% and 0.3% respectively expected by the market.
Lower retail sales in the UK add to the negative news stemming from the UK economy of late possibly derailing the Bank of England from hiking the Bank rate in August.
On Wednesday, the UK inflation data saw headline inflation rising 2.4% over the year, unchanged from May while core inflation stripping the consumer basket off food and energy prices decelerated to 1.9% y/y in June. The data saw Sterling falling lower sharply to 1.3000 and although the GBP/USD recovered overnight, the lower-than-expected UK retail sales saw Sterling fall below 1.3000 temporarily.
Technically, the GBP/USD is in the downward sloping channel and 1.3000 represents an important psychological barrier for the currency pair. Once the GBP/USD break below 1.3000 level decisively, the next hurdle is the round big figure of 1.2900.
GBPUSD 1 hour chart
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