The Pound Falls as CPI and Retail Sales Data Disappoint
July 19, 2018 12:41 pm
of her most important cabinet ministers. Brexit and Foreign Affairs secretaries resigned in protest of her Brexit proposals. As the week went on, the Prime Minister welcomed Donald Trump to her country home but before that, The Sun had published an explosive interview with the US president.
This week, the prime minister has seen a major win in parliament after the members voted for her Brexit proposal. Still, the road to March when the country will fully exit the EU remains long and difficult. This could have major implications on Theresa May’s government and the pound.
The pound has not been helped by the recent released data. Yesterday, the Office of National Statistics (ONS) released consumer price data (CPI) for the month of June. This data is very important because it tells the investors on the status of inflation in the country. In June, the consumer prices rose by 0.0%, which was lower than the expected 0.2%. It was lower than the data in May which stood at 0.4%. On an annualized basis, the CPI rose by 2.4%, which was equally lower than the expected 2.6%.
The so-called core CPI, which excludes the prices of the volatile products like food and energy rose at an annualized rate of 1.9%, which was lower than the expected 2.2% growth. Worse, the housing price index rose by 3.0%, which was lower than the expected 3.8% while the Retail Price Index (RPI) rose by 3.4%, which was higher than May’s 3.3% but lower than the expected 3.5%.
Then today, the country released retail sales, which missed analysts’ forecasts. The retail sales in June rose by an annual rate of 2.9%, which was lower than the 3.8% growth in May. The growth in May was higher than the average mostly because of the royal wedding, which happened in early May. The so-called core CPI rose by an annual rate of 3.0%, which was lower than the 4.5% in May and the expected 3.5%.
This data is disappointing, especially at a time when traders were hoping that the BOE will move to hike rates. As you recall, during the BOE monetary policy meeting in June, there was optimism that the bank would have a rate hike in September. This happened after the number of officials voting for a rate hike increased to three. If the inflation numbers, retail sales, and the complex issue of Brexit continues, this hike will be almost impossible.
As shown below, the pound has fallen sharply in the past few days. Today, it reached an intraday low of 1.2985, which is the lowest level since October last year. As the year goes on, the GBP/USD pair is likely to continue moving lower.
of her most important cabinet ministers. Brexit and Foreign Affairs secretaries resigned in protest of her Brexit proposals. As the week went on, the Prime Minister welcomed Donald Trump to her country home but before that, The Sun had published an explosive interview with the US president.
This week, the prime minister has seen a major win in parliament after the members voted for her Brexit proposal. Still, the road to March when the country will fully exit the EU remains long and difficult. This could have major implications on Theresa May’s government and the pound.
The pound has not been helped by the recent released data. Yesterday, the Office of National Statistics (ONS) released consumer price data (CPI) for the month of June. This data is very important because it tells the investors on the status of inflation in the country. In June, the consumer prices rose by 0.0%, which was lower than the expected 0.2%. It was lower than the data in May which stood at 0.4%. On an annualized basis, the CPI rose by 2.4%, which was equally lower than the expected 2.6%.
The so-called core CPI, which excludes the prices of the volatile products like food and energy rose at an annualized rate of 1.9%, which was lower than the expected 2.2% growth. Worse, the housing price index rose by 3.0%, which was lower than the expected 3.8% while the Retail Price Index (RPI) rose by 3.4%, which was higher than May’s 3.3% but lower than the expected 3.5%.
Then today, the country released retail sales, which missed analysts’ forecasts. The retail sales in June rose by an annual rate of 2.9%, which was lower than the 3.8% growth in May. The growth in May was higher than the average mostly because of the royal wedding, which happened in early May. The so-called core CPI rose by an annual rate of 3.0%, which was lower than the 4.5% in May and the expected 3.5%.
This data is disappointing, especially at a time when traders were hoping that the BOE will move to hike rates. As you recall, during the BOE monetary policy meeting in June, there was optimism that the bank would have a rate hike in September. This happened after the number of officials voting for a rate hike increased to three. If the inflation numbers, retail sales, and the complex issue of Brexit continues, this hike will be almost impossible.
As shown below, the pound has fallen sharply in the past few days. Today, it reached an intraday low of 1.2985, which is the lowest level since October last year. As the year goes on, the GBP/USD pair is likely to continue moving lower.
The post The Pound Falls as CPI and Retail Sales Data Disappoint appeared first on Forex.Info.
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