- UK retail sales carry negative expectations for March after falls in February.
- UK data has been mixed so far this week.
- Concerns about Brexit weigh on GBP/USD.
The UK publishes its Retail Sales report for March on Thursday, April 18th, at 8:30 GMT. Back in February, headline sales advanced by 0.4% MoM. Excluding fuel, consumption rose by a more modest 0.2%. These are moderate changes in comparison to higher volatility beforehand.
Moderate changes are on the cards this time as well, but to the downside: a drop of 0.2% in headline sales, and 0.3% excluding fuel. Year over year, sales are forecast to accelerate to 4.6% after 4%, and ex-fuel to move up to 4% from 3.8%.
So far this week, inflation disappointed with 1.9% against 2% while the jobs report was upbeat. The unemployment rate remained at a low of 3.9% while wage growth remained robust at 3.5%. The final top-tier report for the week can, therefore, serve as a tie-breaker, to an even 1:1 score. However, the score is not exactly balanced.
GBP/USD reaction - downside bias
On one hand, the low expectations leave more room for an upside surprise, opening the door to gains for GBP/USD.
On the other hand, the pound is on the back foot due to stalled Brexit talks. The government and the opposition have not reached any breakthrough on the path forward regarding Brexit. Labour leader Jeremy Corbyn's words that "there is no agreement on the customs union" weighed on the pound.
Unless there is a breakthrough, the bias remains bearish.
So, in case of sales meeting expectations and drop at a moderate scale, there is more room to the downside than the upside. In case of a worse deterioration in consumers' behavior, the pair could fall at a faster clip.
It would take a substantial upside surprise to trigger a rise, especially a sustainable one.
Conclusion
Retail sales probably slightly dropped in March after a small rise in February. The bias is against GBP/USD due to Brexit after balanced data beforehand.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD clings to strong daily gains near 1.0900
EUR/USD trades at its strongest level since mid-October near 1.0900 after starting the week with a bullish gap. The uncertainty surrounding the US election outcome weighs on the US Dollar and helps the pair continue to push higher.
GBP/USD holds above 1.2950 as USD stays under pressure
GBP/USD stays in positive territory above 1.2950 after failing to clear 1.3000 earlier in the day. Heading into the US presidential election, the 10-year US Treasury bond yield is down more than 2% on the day, weighing on the USD and allowing the pair to hold its ground.
Gold trades around $2,730
Gold price is on the defensive below $2,750 in European trading on Monday, erasing the early gains. The downside, however, appears elusive amid the US presidential election risks and the ongoing Middle East geopolitical tensions.
Three fundamentals for the week: Toss up US election, BoE and Fed promise a roller coaster week Premium
Harris or Trump? The world is anxious to know the result of the November 5 vote – and may have to wait long hours for the outcome. Markets will also respond to the composition of Congress. The Bank of England and the Federal Reserve will enter the fray afterward.
US presidential election outcome: What could it mean for the US Dollar? Premium
The US Dollar has regained lost momentum against its six major rivals at the beginning of the final quarter of 2024, as tensions mount ahead of the highly anticipated United States Presidential election due on November 5.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.