Minutes to be key to Pound’s moves

Today Pound bulls have taken a sharp hit as retail sales for June surprised to downside unexpectedly.

• Retail sales for June dropped by -0.2% from May sales, though it is up 4% on yearly basis. This is much lower than what the market was expecting (+0.3% m/m and 4.9% y/y).

Pound dropped to as low as 1.558 post release from 1.566 against dollar. However, bulls have successfully defended key resistance against Euro (0.708-0.71) and key support against Yen (192.6 area).

Bank of England (BOE) governor Mark Carney has indicated possibility of a rate hike at turn of the year, however fireworks might begin well ahead of the main event.

Focus will be on minutes from BOE, to see how hawkish the 9 member MPC camp is turning.

August is of extreme importance as two of the members are set to retire from the board. David Miles and Ian McCafferty are set to retire on 31st August, which means they will have one last BOE minutes to express their view, which could very well turn hawkish. Mr. McCafferty is a known hawk, who already in 2014 voted for rate hike.

August minutes will be crucial to watch out for as one bad retail sales data, unlikely to change outlook.

Pound is currently trading at 1.56 against dollar.