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Forex News: Pound Higher After Solid U.K. Retail Sales, Barnier's

Pound Higher After Solid U.K. Retail Sales, Barnier's Comments

07/18/2019 - 06:46:00 (RTTNews)

(RTTNews) - The pound spiked higher against its major counterparts in the early European session on Thursday, as U.K. retail sales recovered unexpectedly in June and the European Union's Chief Brexit negotiator Michel Barnier suggested that he is open to work on alternative plans for the Irish border.

Data from the Office for National Statistics showed that retail sales volume increased 1 percent month-on-month in June largely driven by non-food product sales. Sales were forecast to fall 0.3 percent after easing 0.6 percent in May.

Likewise, sales excluding auto fuel, expanded 0.9 percent after falling 0.4 percent each in May and April. Economists had forecast a 0.2 percent drop for June.

On a yearly basis, growth in retail sales accelerated to 3.8 percent from 2.2 percent in May. The rate also exceeded the expected rate of 2.6 percent.

Excluding auto fuel, retail sales climbed 3.6 percent after expanding 2 percent in the previous month. Economists had expected an annual growth of 2.6 percent.

Speaking to BBC Radio 4, Barnier said that the deal negotiated by May was the only option available for an orderly exit, but the EU is willing to negotiate on possible alternative arrangements for Irish border.

His remarks came after the UK's House of Lords passed an amendment to prevent the PM from suspending the Parliament until October 31, the Brexit day.

The legislation should be approved by the House of Commons to become a law. If passed, the legislation would prevent the PM's readiness to dissolve the parliament to push through a no-deal Brexit.

The currency traded mixed against its major counterparts in the Asian session. While it fell against the franc and the yen, it was steady against the euro. Against the greenback, it gained.

The pound climbed to a 2-day high of 0.8999 against the euro, from a low of 0.9039 hit at 8:45 pm ET. Next key resistance for the pound is seen around the 0.88 region.

Having dropped to 1.2422 against the greenback at 5:30 pm ET, the pound reversed direction and rose to a 2-day high of 1.2486. The pound is likely to find resistance around the 1.27 level.

The pound appreciated to 134.53 against the yen, following a decline to a 6-1/2-month low of 133.85 at 9:00 pm ET. If the pound rises further, 136.5 is seen as its next resistance level.

Data from the Ministry of Finance showed that Japan posted a merchandise trade surplus of 589.5 billion yen in June.

That exceeded expectations for a surplus of 403.5 billion yen following the 968.3 billion yen deficit of May.

The pound strengthened to a 2-day high of 1.2303 against the franc, reversing from a low of 1.2248 set at 3:00 am ET. On the upside, 1.25 is possibly seen as the next resistance for the pound.

Looking ahead, U.S. weekly jobless claims for the week ended July 13 and leading indicator for June are set for release in the New York session.

Federal Reserve Bank of New York President John Williams will speak about monetary policy at the Annual Meeting of the Central Bank Research Association in New York at 2:15 pm ET.

For comments and feedback: contact editorial@rttnews.com

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