The pound fell against the Canadian dollar last Friday following reports of an unexpected decline in consumer confidence in July. However, the UK’s retail sales data for June surpassed expectations. The Canadian economic data was also mixed. Still, the market participants hammered the pound. Overall, the GBP/CAD pair declined from a high of 1.6925 to a low of 1.6785 in the past 24 hours.
The GfK Consumer Confidence index declined to -30 in July from -24 in June. Economists had anticipated an improvement in the consumer confidence index to -25.
The reported figure reflects the first decline in six months as high inflation and an increasing interest rate continue to have a negative impact on sentiment. The estimates for personal finances and the overall UK economy in the upcoming year have experienced a decline of six and eight points, respectively. Nevertheless, these figures still remain significantly higher compared to the levels observed a year ago. The major purchase index experienced a seven-point decline, indicating that consumers have reduced their expenditure on costlier goods.
The country’s retail sales (in volume terms) increased by 0.70% m-o-m in June, following a 0.10% increase in May and beating estimates of 0.20% growth, according to the Office for National Statistics.
Furthermore, retail sales volumes rose by 0.40% in the three months ended June, compared with the three months ended March.
Non-food store sales volumes grew by 1% in June, following a decline of 0.50% in May. Food store sales volumes rebounded with an increase of 0.70% in June after a decline of 0.40% in May. Non-store retail sales volumes inched up 0.20% m-o-m in June, following an increase of 2.40% in May.
Automotive fuel store sales volumes declined by 0.30% in June, following an increase of 1.70% in May.
According to Statistics Canada, in May, the country’s retail sales increased marginally month over month by 0.20 percent to C$66 billion, falling short of estimates for a 0.50 percent expansion.
Sales grew in five out of nine subsectors. Specifically, the increase was led by a 0.80% rise in motor vehicle and part dealers. Likewise, food and beverage retailers posted an increase of 1%. In volume terms, retail sales grew by 0.10%.
Furthermore, excluding gasoline stations, fuel vendors, and motor vehicle and parts dealers, core retail sales stood unchanged in May, following a 1.20% increase in April and missing forecasts of a 0.20% growth.
According to Statistics Canada, the country’s new housing price index (NHPI) inched up 0.10% m-o-m in June following a similar increase in the previous month. Economists did not anticipate any change in the NHPI.
The GBP/CAD pair is anticipated to remain range-bound in the near term due to the conflicting economic data from both nations.
The historical price chart indicates that the GBP/CAD pair is declining after failing to break the resistance at 1.6925. The next support is anticipated only near 1.6705. Additionally, the currency pair is trading below its 50-day moving average, while the MACD indicator is showing a negative reading. Therefore, we anticipate the GBP/CAD pair to remain in a downtrend in the days ahead.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
