- The Pound Sterling falls back after a short-lived pullback move to near 1.2930. The British currency appears vulnerable near the round-level support of 1.2900 as a sharp decline in the United Kingdom (UK) Retail Sales data for June has raised doubts over whether the Bank of England (BoE) will leave interest rates unchanged in its August policy meeting.
- Data released on Friday showed that UK monthly Retail Sales contracted at a faster-than-expected pace of 1.2% in June. Economists expected a decline of 0.4% against 2.9% growth in May. The decline in Retail Sales was noted across all areas except for automotive fuel. Retail Sales data is a key measure of consumer spending, which drives consumer inflation. Weak domestic demand weighs on price pressures.
- Apart from a sharp contraction in Retail Sales, Average Earnings declined expectedly in three months ending in May. However, the pace at which wages are growing is still higher than what is needed for BoE officials to gain confidence in reducing interest rates.
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