GBP Falls on Retail Sales, CHF and Yen Confronted With Selling Pressure

The dismal UK retail sales report has failed to support the GBP. So far, today’s markets have been relatively calm. As market sentiments appear to have calmed, the yen continues to reverse this week’s gains. After disappointing retail sales statistics, the dollar softens and the pound weakens slightly.

UK retail sales fell -0.9% mom in August, well below expectations for 0.5% mom growth.Total sales rose 0.0% y/y over the 12-month period vs. 2.6% forecast % y/y. Total sales in the three months to August were still up 0.3% from the previous three months. This is also 4.6% higher than the pre-pandemic level in February 2020. Non-fuel sales fell -1.2% MoM, also well below expectations for a 0.7% MoM growth. forecast 2.5% y/y.

Following a surge in key global treasury yields, the Swiss Franc and the Yen are both under selling pressure today. Weak retail sales are weighing on the GBP, and the Euro isn’t far behind. The dollar is mixed, with the Canadian and Australian currencies being the most powerful. During the US session, the economic calendar was light, and the growth of risk markets is pushing the FX markets toward the end of the week.

The Eurozone consumer price index stood at 3.0% y/y in August, compared with 2.2% y/y in July. Energy (+ 1.44%) contributed the most to annual inflation in the euro area, followed by non-energy manufactured goods (+ 0.65%) and food, alcohol and tobacco, and services (+ 0.43%).

The EU CPI was completed at 3.2% y/y, compared with 2.5% y/y in July. The lowest annual rates are registered in Malta (0.4%), Greece (1.2%), and Portugal (1.3%). The highest annual rates were recorded in Estonia, Lithuania, and Poland (all 5.0%). Compared to July, annual inflation remained stable in one member state and rose in 26 countries.

GBP Reaches a New Weekly Low of 1.3735

GBPUSD is falling to fresh weekly lows in the American session, trading at 1.3735, down 0.29 percent at the time of writing. As we get closer to the weekend, we might see some negative pressure as a result of the gloomy market sentiment.

The mood in the market is gloomy. As investors become warier of the global economic recovery due to concerns about the Delta strain and China uncertainties, US stocks are losing ground, and bond yields are rising, mirroring the European trend.

Despite a drop in Consumer Sentiment, the poor UK Retail Sales report fails to help the British pound, as the greenback strengthens. The Federal Open Market Committee (FOMC) will meet on September 21-22 to debate monetary policy, followed by the Bank of England on September 23.