UK retail sales unexpectedly fell in January data, with the headline figure coming in at -0.3% m/m — the worst m/m figure since 2011 — and 1.5% in the y/y comparison. The median forecast had been for rise of 0.6% m/m and 3.4% y/y. December data were revised loser, compounding the disappointing takeaway from the report, with the m/m figure revised to -2.1% m/m from -1.9%. The already released CBI and BRC January surveys had portended downside rise, and official data have markedly undershot expectations for two consecutive months now. The ONS stats office highlighted that the underlying trend has tilted lower for the first time since December 2013, noting that “the evidence suggests that increased prices in fuel and food are significant factors in the slowdown.” CPI is presently running at 1.8% y/y, and two-and-a-half-year high, while the most recent labour market report showed an unexpected slip in average household earnings. Consumer credit data for December also dropped sharply. It’s premature to conclude that a consumer crunch is taking hold, though sterling markets will be sensitive to any corroborating news on this front as UK growth has been driven by the consumer in recent years.
GBPJPY is testing the key support level of 140.00 due to the poor UK Retail Sales. On the 1 hour chart GBPJPY manage to broke the lower Bollinger Bands. Parabolic SAR and MACD remain negative. In a higher 4-hour timeframe, RSI and MACD seems to be falling towards zero level. Hence these indicators suggesting further weakness. Cable on the other hand, is now showing a 0.7% decline on the day in falling to within a few pips of Wednesday’s low at 1.2383, which also marks the present situation of the 50-day moving average.
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