British consumers are probably willing to swallow the higher prices. The volume of sales rose in September by 0.6%. No change was expected.
GBP/USD fails to make gains despite this significant surprise. The pair initially jumped and got close to 1.5750 but is now falling towards 1.57.
After a few months of large swings, the retail sales made small changes and small surprises in the past two months. It’s a bit different now, but it isn’t likely to cause any shift in policy, as even the recent jump in inflation isn’t likely to change the BOE’s course.
One of the things that weigh on British consumers is high prices. Fresh inflation data released this week saw headline CPI jump over 5%. Also the Retail Price Index rose more than expected. Higher prices at retail stores don’t  encourage buying, but British consumers still went out and shopped.
The MPC meeting minutes have shown that the decision to expand the QE program was taken unanimously, contrary to split votes seen earlier in the year. This decision was made as the economy is slowing and curbing demand by higher rates won’t help.
GBP/USD faces resistance at 1.5780, followed by 1.5823. Support is around 1.57, followed by more significant support at 1.5633.
For more on the pound, see the GBP/USD.
