Summary:

• Retail sales was much better than expected
• The data will be welcomed by the central bank
• As a result, the GBPUSD jumps to 1.30, reversing its earlier losses

The Office for National Statistics published the UK’s retail trade report for the month of June, which showed that the UK consumer spending rebounded sharply, coming in much stronger-than market expectations across the time horizon.

The quantity of goods sold in stores and online rose 0.6 percent, more than economists forecast, following a 1.1 percent decline in May, figures from the Office for National Statistics showed Thursday. Sales excluding auto fuel jumped 0.9 percent.It means stores made a contribution to growth in the second quarter, with sales rising 1.5 percent from the previous three months. That adds almost 0.1 percent to GDP, the ONS said.

Here’s the ONS comment” “Today’s retail sales figures show overall growth. A particularly warm June seems to have prompted strong sales in clothing, which has compensated for a decline in food and fuel sales for the month. Looking at the quarterly data, the underlying trend as suggested by the three-month on three-month movement is one of growth, following a fall in quarter 1, suggesting a relatively flat first half of 2017.” 

Sales rose in almost every category last month. Spending on clothes helped lift sales at department stores by 2.7 percent and sales of household goods rose 3.3 percent. Food sales fell 0.5 percent, partly due to weaker alcohol demand. Sales rose 2.9 percent from a year earlier, up from growth of 0.9 percent in May.

The GBP rose after the print, reversing part of its earlier losses. What’s more, the pair rebounds from an important level of support, which in theory could mean that a new higher low was posted. If so, then another leg higher could be expected.

 GBPUSD rebound from 1.2970, an important support. The pair hovers around 1.30.