The economic data released overnight on Tuesday was stronger than expected with an annual increase in retail sales according to the latest BRC survey. The RICS housing-market survey also strengthened to a 21-month high as 18.1% of respondents reported falling prices compared with 43.9% the previous month. The firm data helped Sterling hold above the 1.62 level against the dollar in early European trading with a push towards 1.63.
The headline UK inflation rate fell to 1.8% in June from 2.2% previously which was in line with market expectations while the retail prices index fell 1.6% over the year. The data is liable to increase speculation that the Bank of England could move to expand the quantitative easing. The UK currency still proved resilient and consolidated above 1.63 in New York with the Euro unable to regain the 0.86 level.
The latest labour-market data will be watched very closely on Wednesday and is liable to have a greater impact on currency sentiment, especially if there is a higher than expected rise in the claimant count.
By: Darrell Jobman
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