Strong UK Retail Sales Data Boosts Sterling

LONDON, Jun 21 (MNI) – Release of stronger-than-forecast UK retail sales data provided the pound with a strong boost, helping cable recover off early European lows of $1.5658. Yesterday we had the flash Markit April Services PMP (57.8 vs 58.8 expected) and the Dallas Fed Manufacturing index (-16 vs -12 expected) which were also below expectations. WTI was up $57.80/bbl during intraday trading however falling back to $56.24/bbl during latter part of the day. Looking at yesterday’s European market we saw the major indices recover strongly after weakness during the morning session. The swing in the indices where driven by news that Alexis Tsipras had made significant a reshuffle of the Greek negotiating team to help matters going forward.

The move to change the negotiation team could reduce the influence of Yanis Varoufakis on pending talks, as they are reported to be progressing too slowly. Looking at today we had the UK’s GDP figures which fell short of consensus at +0.3% qoq vs +0.5% qoq expected. This afternoon in the US we have February S&P/CS house price reads and April consumer confidence.

Regionally, Germany was up +0.2 pts to 52, France down -0.4 pts to 48, Italy up +0.5 pts to 53.8 and Spain down -0.1 pts to 54.2. This morning we had the March PPI index reading at -2.3% yoy which was in line with expectations and up from -2.8% in February.

Looking forward to the day ahead we have a relatively busy day with the PMI print for the Eurozone and also regionally for Germany, France and UK. Also retail sales figures will be out with a forecast of -0.7% mom.

Looking at Monday’s European market we witnessed a mixed reaction to the April manufacturing readings, with the Stoxx 600 (-0.15%), DAX (-0.7%), CAC (+0.22%) and the FTSE 100 (+0.70%, Friday’s numbers).