Some good news for the pound: retail sales dropped only 0.4% in February in the headline figures. Core sales also beat by sliding only 0.2% instead of 1%. Year over year, retail sales rose 3.8% as expected but core sales beat with 4.1%.
GBP/USD was already front running the release and extends the recovery in the aftermath. Update: the rise is limited and the pound may be returning to the previous gloom. 1.4050 remains key support. The high was 1.4090.
Retail sales in the UK were expected to slide by 0.7% in February after a big jump of 2.3% in January. Excluding fuel, a drop of 2.3% was predicted. Year over year, more modest gains were on the cards: 3.8% instead of 5.2% in the headline number and 3.4% instead of 5% excluding fuel.
GBP/USD traded close to critical support at 1.4050 towards the release.
The Brussels Bombing raised Brexit risks and were the main downer for the pound this week. Worries about immigration policy and competence to fight terror were cited as reasons for pushing a few more Brits to vote Leave on the June 23rd referendum.
In addition, we heard different tunes from the Federal Reserve this week: after going to the extreme dovish side in the rate decision, we heard that a rate hike could even come as soon as April. This still seems unlikely, but the odds are higher and so is the US dollar.
More: GBP: Recovery Only After The EU Referendum; Where To Target? – Credit Agricole