Retail sales free fell by 1.2%, a very disappointing outcome. They were expected to remain flat in April after dropping by 0.7% in March. Year over year, retail sales rose by only 0.5%, much worse than 2% expected. The MPC vote 6:3 against QE last time, with outgoing governor Mervyn King remaining in opposition. No change in voting was seen now. Public Sector Net Borrowing was predicted to stand at 7.6 billion pounds, dropping from 16.7 billion beforehand. The actual result is 8 billion, within expectations. The retail sales number certainly hurts the pound.
GBP/USD was sliding towards 1.5120 before the multiple publications and is now trading under 1.51. At around 1.5075, cable is at the lowest since April 4th. 1.50 provides support.
Last week, it seemed that the pound had reasons to rise: better growth prospects from the BOE and an improvement in unemployment. This week is totally different.
Yesterday, the pound was hit hard by weak inflation numbers. The MPC voted unanimously not to change the rates, as widely expected. These numbers could encourage more QE, but new decisions are awaiting the new governor Mark Carney.
So where is the UK economy headed? And where will the pound go? We will get more hints in the second release of GDP. See how to trade the UK GDP with GBP/USD.
For more, see the GBP/USD forecast. Here is a live 30 minute chart:
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