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Cable Rallies to 1.6450 After Strong December U.K. Retail Sales

Posted by Chris Advincula on Jan 17, 2014 7:38:00 AM

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Chart: WorldWideMarkets Alpha Trader

Cable is higher across the board after the stronger than expected U.K. Retail Sales for December. The pound surged higher by 113 points against the dollar immediately after the data to the 1.6458 high from 1.6345. (Range: High 1.6458 Low 1.6310 +148 pips). Sterling-yen rose to 171.85 from 10.20 (+165 pips) while euro-sterling fell 80 pips to 0.8260 from 0.8340.

The U.K. Retail Sales volume rose 2.6 percent in December, far above the +0.3 percent median forecast and +5.3% year-on-year, led by a the gains at departments stores and shops during the past Christmas season. The Office for National Statics said this was the strongest December gain since 1996. Department stores posted a record 8.7 percent in sales. The data was indeed very encouraging and eliminated some of the pessimism of the U.K. economy after the both the industrial production and construction fell in November. The strong retail sales data on the other hand, will not be enough to push the U.K. GDP above the 1 percent threshold, according to some analysts. The GDP rose 0.8 percent in the third quarter. With Inflation cooling, wage growth remains subdued which may cap potential gains on retail sales in the coming months.

The yield for the benchmark 10-year UK Gilt fell two basis points to 2.83 percent after falling 2.80 percent, the lowest level since Dec. 2.

Near Term Support:        1.6310, 1.6360, 1.6380, 1.6410

Near Term Resistance:  1.6460, 1.6483 1.6510, 1.6575


Chris Advincula



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Chart: WorldWideMarkets Alpha Trader


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