"After a recent improved run for the High Street, a fall in clothing and food sales has contributed to a disappointing month,"
- Barry Williams, from CBI
A report from the Confederation of Business Industry was expected to show weaker consumption at the U.K. retailers, hence, market reaction was muted. The cable bounced back from a strong support at 1.6952 and jumped more than 30 pips on profit taking.
Sales at Britain's retailers slowed down markedly in June to a balance of +4, following a reading of +16 in May and missing expectations for a further improvement to +23. Still the indicator points at higher sales volume, with any figure above 0 indicating improving conditions. The company, however, stressed out that the indicator is likely to accelerate next month. Moreover, Wednesday's report provides an insight into retail sector performance in June, hence, a report from the ONS that will be unveiled on July 24 will be disappointing. Following weaker than expected data the CBI said that slow wage growth is still weighing on how much consumers were willing to spend over the observed period. This month, the main disappointment came from a fall in clothing and food sales. It seems that even sluggish performance of England's football team at the World Cup will weigh on the retail sales, as analysts were over ambitious, betting on stronger consumption during the tournament. It seems that households will not be able to provide a solid boost to the second quarter's GDP, as expectations for a July's reading stood at the five-month low, despite CBI's projections.
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