The main focus in the UK yesterday was on the release of the minutes of the BoE’s August MPC meeting. There had been some speculation that one or more members might have voted for an increase in quantitative easing (QE). The lack of formal support for further QE saw sterling initially react positively, though it gave up much of its gains in later trading on a realisation that the minutes really shed little new light on monetary policy. While in a tight rage against the euro, sterling starts the day weaker against a broadly firmer dollar. Focus today now switches to July retail sales data, the CBI’s industrial trends report and the public finance figures.

With the main focus on “Retail Sales” today- Sterling received a large boost after figures showed a rise of 1.1% in July, the strongest gains since February. UK retail sales have increased 1.1% in July from June, and 1.3% compared to the same month last year, beating experts consensus, which called for a 0.4% monthly increase and a 0.6% rise year on year. Prior to the data release sterling held a highly bearish stance against the US dollar, having weakened considerably in the Asian trading session. The Pound shot upto $1.5603 minutes after the data was released gaining almost an entire cent in little under 10 minutes.

Sterling was getting dangerously close to the 200 day moving average at 1.5488, which was acting as solid “support”. A Break below would likely trigger aggressive selling of the Pound therefore buyers should remember the downside risks with the GBP/USD at present. The GBP/EUR cross is looking well supported today with over 0.6% gained from this mornings opening. Buyers with short/medium term requirements are also advised to take advantage of the current “highs” as the GBP/EUR until now has been confined to very narrow ranges.

Overall any buyers into any of the 16 most actively traded currencies can enjoy the current rally following the Retail Sales release today – equally sellers should look to work “Protective Stops” in the market to avoid any exposure against further adverse market movement. If you would like to discuss your requirement with me further do not hesitate to give me a call on my direct line below.

Tom Trevorrow

Senior Trader

+0044 1736 335264

tom.trevorrow@torfx.com