Pound Rises Amid Encouraging U.K. Retail Sales Data, Brexit Deal Hopes
The pound advanced against its major rivals in the European
session on Friday, as U.K. retail sales rose for the fourth
consecutive month in August and fresh Brexit hopes overshadowed
worries about the the possibility of a negative interest rate
policy by the Bank of England in coming months.
Data from the Office for National Statistics showed that UK
retail sales continued to grow in August but the pace of expansion
Retail sales volume increased 0.8 percent month-on-month in
August, but slower than July's 3.7 percent increase. Sales were
forecast to climb 0.7 percent. This was the fourth consecutive rise
European Commission President Ursula von der Leyen said that a
trade deal remained possible with the U.K. before the looming
The commission president's comments eased worries over securing
a fresh trade deal between the U.K. and the EU.
The gains remained limited due to the Bank of England's signal
to cut interest rates to negative in coming months.
The BOE hinted at negative rates on Thursday citing uncertainty
over the risks arising from the coronavirus pandemic and
The bank said that it had discussed the effectiveness of
negative interest rates due to uncertain growth outlook and the
possibility of higher unemployment.
The pound recovered to 0.9121 against the euro, from a low of
0.9153 set at 10:45 pm ET. The pound is seen finding resistance
around the 0.88 mark.
Preliminary data from the Federal Statistical Office showed that
German producer prices declined at the slowest pace in five months
Producer prices declined 1.2 percent year-on-year following a
1.7 percent fall in July. Economists had expected a 1.4 percent
The pound appreciated to 1.3000 against the greenback from
Thursday's closing value of 1.2974. Next key resistance for the
pound is seen around the 1.31 level.
After dropping to 1.1762 at 10:45 pm ET, the pound rebounded to
1.1801 against the franc. If the pound rallies again, 1.21 is
likely seen as its next resistance level.
In contrast, the pound reached as low as 135.32 versus the yen.
The pair was worth 135.88 at Thursday's close. The currency is
likely to face support around the 132.00 region.
Data from the Ministry of Internal Affairs and Communications
showed that Japan consumer prices rose 0.2 percent on year in
August - in line with expectations and slowing from 0.3 percent in
Core CPI, which excludes volatile food costs, sank an annual 0.4
percent - again matching forecasts following the flat reading in
the previous month.
Looking ahead, Canada retail sales for July and University of
Michigan's preliminary consumer sentiment index for September will
be featured in the New York session.
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