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- U.K. Retail Sales to Increase for Fifth Consecutive Month in March.
- Will Faster Private-Sector Consumption Encourage BoE to Sounds More Hawkish?
Trading the News: U.K. Retail Sales
Another 0.4% expansion in U.K. Retail Sales may heighten the appeal of the British Pound and prompt a near-term breakout in GBP/USD as it puts increased pressure on the Bank of England (BoE) to normalize monetary policy sooner rather than later.
What’s Expected:
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Why Is This Event Important:
The more hawkish BoE Minutes suggest that the central bank remains on course to raise the benchmark interest rate off of the record-low, and signs of a stronger U.K. recovery may spur a larger dissent within the Monetary Policy Committee (MPC) as a growing number of BoE officials see a greater risk for inflation.
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Expectations: Bullish Argument/Scenario
| Release | Expected | Actual |
| Consumer Price Index Core (YoY) (JUN) | 0.9% | 0.8% |
| NIESR GDP Estimate (JUN) | -- | 0.7% |
| GfK Consumer Confidence (MAR) | 2 | 7 |
Discounted prices along with the pickup in household confidence may generate a strong retail sales report, and a faster rate of private-consumption may boost interest rate expectations as the U.K. economy gets on a firmer footing.
Risk: Bearish Argument/Scenario
| Release | Expected | Actual |
| Jobless Claims Change (JUN) | -9.0K | 7.0K |
| Average Hourly Earnings ex. Bonus (3MoY) (MAY) | 3.0% | 2.8% |
| Net Consumer Credit (MAY) | 1.1B | 1.0B |
However, easing private-sector credit paired with slower job growth may drag on spending, and a dismal sales print may spur a further consolidation in the exchange rate as it raises the BoE’s scope to retain its current policy stance for an extended period.
How To Trade This Event Risk(Video)
Bullish GBP Trade: Retail Sales Increases Another 0.4% or Greater
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Need green, five-minute candle following the release to consider a long British Pound trade.
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If market reaction favors bullish sterling trade, buy GBP/USD with two separate position.
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Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward.
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Move stop to entry on remaining position once initial target is hit, set reasonable limit.
Bearish GBP Trade: U.K. Household Spending Disappoints
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Need red, five-minute candle to favor a short GBP/USD trade.
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Implement same setup as the bullish British Pound trade, just in opposite direction.
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