When are the UK retail sales and how could they affect GBP/USD?

UK retail sales Overview

The UK retail sales, scheduled to be published later this session at 0830 GMT, are expected to increase 0.2% m/m in July, following an unexpected fall by -0.5% in June. Total retail sales are seen rising 3.0% over the year, up from 2.9% in June. Meanwhile, core retail sales, stripping the basket off motor fuel sales, are seen rising 0.1% m/m while rising 2.8% y/y.

As noted by analysts at Nomura: “Evidence on retail sales in July has been mixed. The reported balance of the CBI distributive trades survey was around its long-run average, while the BRC reported the slowest growth in sales values for three months.”

“The hot weather may have also influenced the pattern of sales, but it is by no means obvious in which direction (in a recent research report we argued that the effect may be insignificantly negative). Even a small monthly rise would increase the annual average pace of growth in official sales to its highest for over a year.”

Deviation impact on GBP/USD

Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 10 and 70 pips in deviations up to 3.5 to -1.5, although in some cases, if notable enough, can fuel movements of up to 100-pips.

How could it affect GBP/USD?

Ahead of the key release, the pair was seen building on overnight modest rebound from near 14-month lows. A stronger than expected reading could provide a minor boost to the ongoing recovery move and lift the pair further towards 1.2765-70 supply zone. A follow-through buying has the potential to lift the pair, further beyond the 1.2800 handle, towards retesting weekly highs resistance, near the 1.2825-30 region. 

Alternatively, a weaker print could drag the pair back towards the 1.2700 handle support, which if broken might turn the pair vulnerable to resume with its well-established bearish trend and break below overnight swing low, around the 1.2660 area, and aim towards challenging the 1.2600 round figure mark. 

Key Notes

   •  UK retail sales Preview: World Cup football success failed to support sales in June with July barely rising

   •  GBP/USD trying to hang on to 1.27 ahead of UK retail sales

   •  GBP/USD Technical Analysis: Bulls show signs of life on 4-hour chart

About the UK retail sales

The Retail Sales released by the Office for National Statistics (ONS) measures the total receipts of retail stores. Monthly per cent changes reflect the rate of changes in such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. Generally speaking, a high reading is seen as positive, or bullish for the GBP, while a low reading is seen as negative or bearish.