GBP flows: GBP briefly dips on weaker retail sales
Weaker than expected April retail sales are likely erratic and will have little sustained impact on GBP
UK April retail sales come in much weaker than expected, falling 2.3% m/m, but after a quick spike higher EUR/GBP has returned to opening levels just below 0.8520. The decline in retail sales was unexpectedly large, but retail sales have been choppy in recent months, and are often seasonally affected in the spring, so it would be wrong to read too much into today’s data. The underlying trends remain fairly steady, and we are likely to have a significant correction next month. If that is also weak, there will be mire reason for concern, but for now the market will continue to see little to no chance of a rate cut in June and EUR/GBP is likely to hold close to 0.8520, with the bias still towards testing the 0.8492-0.8500 support area.
