Analysis / Daily / Finance / forex

GBP/USD edges lower

One Pound

The pound edged lower against the U.S. dollar, after the release of downbeat U.K. retail sales data, although hopes for a rate hike by the Bank of England later in the year continued to support. GBP/USD hit 1.5480 during European morning trade, the session low.  The U.K. Office for National Statistics reported on Thursday that retail sales declined by 0.2% last month, disappointing forecasts for a gain of 0.3%. Retail sales in May rose by 0.3%, whose figure was revised from a previously reported gain of 0.2%. Year-on-year, retail sales rose 4.0% in June, below expectations for a 4.9% gain, after rising at a rate of 4.7% in May. Core retail sales, which exclude automobile sales, fell by 0.2% last month, compared to forecasts for a 0.3% rise, after gaining 0.4% in May. The data came after BoE Governor Mark Carney said last week that the decision to raise interest rates from record lows will come into sharper focus around the end of 2015, his strongest hint yet about the timing of the British central bank’s next move.

euro

The euro edged lower against the U.S. dollar today, as markets digested news the Greek parliament had approved a second series of austerity measures and turned their attention to upcoming data on euro zone manufacturing activity. EUR/USD hit 1.0964 during late Asian trade, the session low, as the German Flash Manufacturing PMI came out at 51.5 versus the previous 51.9, expected 52.1. Market traders say the pair  was likely to find support at 1.0868, Wednesday’s low and resistance at 1.1018, yesterday’s high and a one-week high. The single currency strengthened yesterday after a majority of Greek lawmakers voted in favor of a second set of reforms, signalling that negotiations on an €86 billion European Union bailout can begin. The country is aiming for a deal by the middle of next month. The new measures include changes to Greek banking and an overhaul of the judiciary system. Greece had passed an initial set of austerity measures imposed by its creditors last week. These were a mix of economic reforms and budget cuts demanded before bailout talks could continue. The euro was also lower against the pound, with GBP/EUR reaching the 1.4140 hurdle.

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The dollar remained supported after the U.S. Department of Labor reported on Thursday that the number of individuals filing for initial jobless benefits in the week ending July 18 fell by 26,000 to a 40-year low of 255,000 from the previous week’s total of 281,000. The data added to expectations for a U.S. rate hike in the near future. Federal Reserve Chair Janet Yellen said last week that the central bank is likely to raise rates “at some point this year.” U.S. stocks fall for 3rd straight day as weak earnings weigh. The selling pressure accelerated in the afternoon session and the main indexes closed with losses for the third straight day, led lower by utilities, materials and industrial stocks. A cautious mood on Wall Street was evident in the rise in havens such as Treasurys and a selloff in commodities like oil and gold.

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