EUR/GBP: Counter-intuitive bounce despite upbeat UK retail sales

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 17, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Bali) - EUR/GBP has seen a counter-intuitive rebound worth over 20/25 pips, last at 0.7255, after a much better-than-expected UK retail sales report (excl autos), coming at 1.7% vs 0.5% expected, which initially saw a 35/40 pips algo-led sell-off from 0.7270 area.

    UK retail sales - official release via UK's ONS

    Year-on-year estimates in the quantity bought in the retail industry show growth for the 30th consecutive month in October 2015, increasing by 3.8% compared with October 2014.

    The underlying pattern in the data, as suggested by the 3 month on 3 month movement in the quantity bought, showed growth for the 23rd consecutive month, increasing by 0.9%.

    Compared with September 2015, the quantity bought in the retail industry is estimated to have decreased by 0.6%.

    Average store prices (including petrol stations) fell by 3.3% in October 2015 compared with October 2014, the 16th consecutive month of year-on-year price falls.

    The amount spent in the retail industry increased by 0.5% in October 2015 compared with October 2014 and decreased by 0.7% compared with September 2015.

    The value of online sales increased by 11.2% in October 2015 compared with October 2014 and decreased by 0.8% compared with September 2015.

    Revisions to this release were caused by the incorporation of late data. The earliest revisions point for current price, non-seasonally adjusted data was October 2014. More information on revisions can be found in the background notes.

    EUR/GBP - Levels to watch

    On the topside, key levels of resistance can be found at 0.7275/80 )daily pivot), ahead of 0.73 round number (paycheck liquidity), followed by more aggressive targets at 0.7350/65 (some vacuum in between). On the downside, 0.7230/35 is the most immediate support (session low), followed by 0.72/7210 (Dec10-14 sequence of lows); only a break below the latter would expose 0.7170/85 area (Dec 4/7 highs).
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