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UK Retail Sales Data: Another Miss Could Weigh on the Pound

UK Retail Sales Data: Another Miss Could Weigh on the Pound, FP Markets

It has been quite the week for the UK.

Tuesday welcomed UK wage data, which fell less than expected and illustrated sticky inflation. Headline wages (including bonuses) dipped to 5.8% (expected: 5.6%; previous: 6.7%) in the three months to December 2023, and pay that excludes bonuses also fell to 6.2% (expected: 6.0%; previous: 6.7%). Wednesday saw the January UK CPI undershoot expectations and match December’s print; both headline and core measures on a year-over-year basis came in at 4.0% and 5.1%, respectively. Thursday’s Q4 2023 GDP data effectively tipped the UK into a technical recession; it was a miss across the board here. According to the preliminary estimate for Q4 (2023) growth, real GDP contracted more than expected at -0.3% as per the Office for National Statistics (ONS), versus -0.1% in Q3 and surpassing the estimate range low of -0.2%.

How to Trade UK Retail Sales?

Well, with wages higher than expected, along with CPI and GDP data revealing larger-than-expected misses, a miss on UK retail sales data tomorrow could spark another downside leg in sterling and lift FTSE 100 futures north.

From December to January, expectations heading into the event are for retail sales to show an increase of 1.5%, according to the Reuters poll (up from December’s fall of -3.2%), while the year-over-year measure is also expected to show an improvement to -1.4% from December’s reading of -2.4%. So, as we can see, forecasts suggest a meaningful recovery in retail sales; therefore, in order to pull GBP pairs southbound tomorrow, bears will be looking for data to remain weak (in negative territory on a monthly basis).

EUR/GBP Rebounds from Support

The Research Team touched on the EUR/GBP cross earlier this week and directed the technical spotlight towards a clear-cut daily support base, made up of a 100% projection ratio at £0.8498 and horizontal support from £0.8514.

Should a miss come to fruition, short-term H1 support from £0.8543-£0.8548 could hold ground and welcome bids and look to refresh highs beyond £0.8570 (blue oval). While it is obvious that sentiment has been to the downside for this market for quite some time now, knowing that price recently rebounded from daily support could encourage buyers.

Of course, a healthy UK retail sales print (stronger than median estimates) could have the EUR/GBP pair sell off sharply. H1 support would offer little and the move may even threaten current longs at the noted daily support.

UK Retail Sales Data: Another Miss Could Weigh on the Pound, FP MarketsDISCLAIMER:

The information contained in this material is intended for general advice only. It does not take into account your investment objectives, financial situation or particular needs. FP Markets has made every effort to ensure the accuracy of the information as at the date of publication. FP Markets does not give any warranty or representation as to the material. Examples included in this material are for illustrative purposes only. To the extent permitted by law, FP Markets and its employees shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided in or omitted from this material. Features of the FP Markets products including applicable fees and charges are outlined in the Product Disclosure Statements available from FP Markets website, www.fpmarkets.com and should be considered before deciding to deal in those products. Derivatives can be risky; losses can exceed your initial payment. FP Markets recommends that you seek independent advice. First Prudential Markets Pty Ltd trading as FP Markets ABN 16 112 600 281, Australian Financial Services License Number 286354.













  • UK Retail Sales Data: Another Miss Could Weigh on the Pound, FP Markets
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