British Pound – Signs of strength?
British Pound – Signs of strength?
On Monday two economic reports were released which gave forex traders a positive as well as negative surprise. Let’s start with the negative one which was also the first one released during the Asian trading session. Rightmove House Prices contracted by 3.3% in December and rose 7.0% annualized. This showed a sharper slowdown as compare to November where Rightmove House Prices contracted by 1.7% and rose 8.5% annualized. During the European trading session CBI data was released which showed CBI Trends Total Orders rose to 5 in December from the 3 reported in November and CBI Trends Selling Prices rose to 7 from -1.
On Tuesday a similar scenario emerged. The Bank of England published the results of its stress test and all banks with the exception of one have passed the stress test which is also a positive for the British Pound. The CPI disappointed and showed monthly deflation of 0.3%. The annualized CPI rose 1.0%. The PPI surprised to the upside with an increase of 0.2% in November and an annualized contraction of 0.1%. The RPI contracted by 0.2% monthly and rose 2.0% annualized, missing expectations. The British Pound traded lower.
On Wednesday forex traders received important data about the health of the UK labor market. The Employment Change showed that over the past three months between August and October the UK added 115,000 jobs, only 3,000 more than during the previous three month period ending in September. Economists expected 137,000 created jobs. The unemployment rate remained unchanged at 6.0%, but initial jobless claims contracted by 26,900. The British Pound came under pressure.
Today saw the British Pound finally rally as retail sales for November surged. This is very important for a healthy shopping season, consumer and overall economy. Retail sales rose by 1.7% in November and 6.9% annualized. Including auto sales retail sales rose 1.6% and 6.4%. October’s retail sales were revised higher across the board as well. The British Pound rebounded sharply and could resume its rally into the next trading week. There are signs of strength in the British Pound!