The pound rallied against the greenback on Friday following July’s release of over four-year low building permit data. The UK retail sales data was a notch lower than the market’s expectations. Overall, the GBP/USD pair rallied from a low of 1.2840 to a high of 1.2950.
The UK’s Office for National Statistics stated that the country’s retail sales volumes grew 0.50% m-o-m in July following a 0.90% decline in the previous month, but missed forecasts of a 0.60% increase.
The increase was led by a 1.40% m-o-m increase in non-food store volumes following a 1.90% decline in June. Non-store retail sales volumes grew by 0.70% in July. Likewise, automotive fuel sales volumes dipped by 1.90% in July, following a rise of 2.20% in June.
Additionally, the total spent online, also known as “online spending values,” rose by 2.50% month-over-month in July. Compared to the same period last year, online spending values increased by 3.60% in July 2024. Interestingly, the percentage of online sales increased slightly to 27.80% in July from 27.40% in June.
Total spending (amount spent in-store and online) grew by 0.70% m-o-m in July.
Overall, sales volumes in the UK rose by 1.10% in the three months leading up to July, compared to the three months ending in April. On a y-o-y basis, the UK’s retail sales volumes grew by 1.40% in July 2024.
According to the US Census Bureau, the country’s building permits declined to 1,396,000 units in July from 1,454,000 units in June, missing forecasts of 1.43 million units.
The reported figure is 7% lower than the July 2023 reading of 1,501,000 units. Single-family authorizations were 983,000 units in July, a decrease of 0.10% from 939,000 units in June.
The Census Bureau also stated that housing starts were 1,238,000 units in July, a decrease of 6.80% from 1,329,000 units in June, and missed forecasts of 1.34 million units. The reported figure is 16% below the July 2023 reading of 1,473,000 units. Single-family housing starts were 851,000 units in July, a decrease of 14.10% from 991,000 units in June.
According to the preliminary data published by the University of Michigan, US consumer sentiment improved to 67.80 in August from 66.40 in July, surpassing forecasts of 66.70. Similarly, the consumer expectations index increased to 72.10 from 68.80.
However, the current economic conditions index dropped to 60.90 in August from 62.70 in July.
The weak economic data from both countries is expected to keep the GBP/USD pair range-bound in the short term.
Technically, the GBP/USD pair is rising after testing the support at 1.2820. The next resistance is anticipated to be only near 1.3045. Additionally, the currency pair is trading above its 50-day moving average, while the stochastic indicator is in the bullish zone. Therefore, we anticipate the GBP/USD pair will remain in an uptrend for the next few trading sessions.
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.
