After a torrid start to the week where it was relentlessly sold across board, the cable got some respite as the retail sales numbers for the UK pulled off a positive surprise. The UK Retail Sales numbers for June came in at +1.0% as against the -0.3% that the markets expected. This was also a better reading than the May numbers which were registered at -0.6%.
The Core Retail Sales (retail sales ex auto and car fuel sales) number was reported at +0.9% for the last month, as against the market consensus figure of -0.2%. This was also an improvement on the -0.4% that was registered previously.
UK retail sales also rose 3.8% in June on an annualized basis, which beat the 2.6% that markets were expecting. We also had the annualized core retail sales grow by 3.6% for June when compared with the 2.7% that the market was expecting.
This report has provided a respite for the GBP and it is expected that the Cable would register some transient recovery on the day in its pairings with the US Dollar, Euro and Japanese Yen.
With the Euro starting the day on a weaker note against most majors, the EURGBP pair would be a good pair to day trade. The EURGBP would be good to sell on a rally. Already, a long bearish hourly candle has breached the S2 pivot support, following an earlier breach of S1 with a mild pullback. I expect the broken S2 pivot, which served as a strong support for price action on July 15-16, to serve as new resistance for the day. EURGBP should hit the downside target of 0.8974 today.Don’t miss a beat! Follow us on Twitter.