Sterling Lifts By Strong Retail Sales Data

The consumer is alive and kicking in the UK. UK retail sales chalked up its largest monthly gain in 11 months in January. Sales rose 0.8% m/m and 5.6% y/y versus expectations of 0.3% and 4.7%. Such strong retail sales numbers are unexpected, given the sluggish state of the UK economy. The market is thinking the Bank of England may be unreluctant to cut interest rates further.

The British pound got a huge boost from this data - Cable rose 160 pips following the release, and its next bull targets are 1.9600 and 1.9630.

US Philadelphia Fed business index for February plummeted to -24, and that’s a jaw dropping fall compared to the -12 expected. January’s index was at -20.9. February’s drop is the biggest drop since October 2001.

The US dollar may trade to the downside following this data. EUR/USD’s next bull targets come at 1.4800, 1.4840-50.