EUR/GBP Fundamental Analysis – August 21, 2015 – Forecast

Analysis and Recommendations:

The EUR/GBP added 50 points as the pound tanked after disappointing retail sales today. The pound is trading at 0.7140 against the euro.  U.K. retail sales rose in July, led by department stores along with furniture and household electrical appliances.

The volume of sales excluding fuel rose 0.4 percent from June, the Office for National Statistics said in London on Thursday. Including fuel, sales rose 0.1 percent from the previous month and were up 4.2 percent on the year, a 28th annual gain.

Low inflation and faster wage growth are helping to support consumer spending. Bank of England policy makers see price gains picking up at the end of the year after they crept back above zero in July, and Governor Mark Carney said last month that the time for higher interest rates is nearing.

While the growth in July sales excluding fuel matched the median forecast of economists in a Bloomberg survey, the figure including fuel fell short of predictions for a 0.4 percent increase. On the month, fuel sales dropped 2.6 percent.

The figures were a little lower than expected, partly because wage rises are rising faster than inflation, so in theory people should have more money to spend.

“With wages increasing, falling fuel prices and with a low interest rate environment, discretionary spending has been boosted by rising real incomes,” said Ian Geddes at Deloitte.

“With more money in their pockets, consumers are choosing to spend their money on big ticket items. This is particularly the case for the furniture and household goods subsectors, with consumers making home improvements during the summer months.”

David Kern at the British Chambers of Commerce described annual sales growth as “very strong”, but said the monthly figure was “a reminder that the recovery is still fragile.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports.

Today’s economic releases:

 

Upcoming Economic Events that you should be monitoring:

Friday, August 21, 2015

Government Bond Auctions

Date Time Country

Aug 20 10:30 Spain Auctions Bonos/Obligaciones

Aug 20 11:30 UK Auctions 4.25% 2036 Gilt

Aug 21 17:30 Italy Announces details of CTZ/BTPei on 26 Aug