GBP/USD rose on broad US Dollar weakness, even as UK releases sent mixed signals. Retail sales volumes fell 0.5% m/m in July after a June gain of 0.7% that was revised down from 1.0%, while sales excluding automotive fuel dropped 0.9% m/m versus a consensus forecast of -0.5% and compared with a 0.9% rise in June, revised down from 1.1%. The pullback partly unwound momentum from the prior two months.
Mixed Economic Data
Retail sales volumes fell 0.5% m/m in July after a June gain of 0.7% that was revised down from 1.0%, while sales excluding automotive fuel dropped 0.9% m/m versus a consensus forecast of -0.5% and compared with a 0.9% rise in June, revised down from 1.1%. The pullback partly unwound momentum from the prior two months.
Business Surveys and Market Expectations
Business surveys were firmer. The UK August composite PMI ticked up to 52.5, above the 51.6 consensus and the prior 52.2, reaching a four-month high as stronger services activity offset slower manufacturing production growth. In rates, the swaps curve continues to fully price 50 bps of Bank of England tightening over the next 12 months, while references were made to the UK’s negative output gap and the possibility of a dovish repricing. The UK’s growth-inflation mix was described as supportive for Sterling.
