The Brexit effect might already be felt: retail sales dropped 0.9% in June, worse than expected. Year over year, a rise of only 4.3% was recorded. Core sales also fell 0.9% and rose 3.9% y/y. All figures fell short. Publis Sector Net Borrowing came out at 7.3 billion, better than a bigger deficit of 9.3 billion expected.
GBP/USD remains pressured, but it seems markets were front-running the event. Update: after the initial hesitation, GBP/USD falls to 1.3170.
The UK was expected to report a drop of 0.6% in retail sales m/m in June, the month of the EU Referendum. This comes after a rise of 0.9% in May. Year over year, a rise of 5% was predicted, after 6% beforehand. Core retail sales carried expectations for a drop of 0.6% after +1% and 4.8% y/y after 5.7%.
GBP/USD continued advancing gradually, fueled by a not-so-terrible BOE assessment of the economy post Brexit. Cable traded around 1.3250, continuing its recovery within wide ranges seen lately but slid in the last minutes.
More: Sell GBP/USD – Morgan Stanley Trade Of The Week
Here is the chart:
For GBP/JPY, the move is even bigger, as it is compounded with helicopter denial from Kuroda. The yen is strengthening, pushing pound/yen ever lower.
