Forexpros – The euro fell to a two-and-a-half-week low against the pound on Thursday, after data showed that U.K. retail sales rose unexpectedly in July, indicating that the U.K. economy may not be as weak as feared.
EUR/GBP hit 0.7813 during European morning trade, the pair’s lowest since July 31; the pair subsequently consolidated at 0.7818, sliding 0.22%.
The pair is likely to find support at 0.7789, the low of July 30 and resistance at 0.7845, the session high.
The Office for National Statistics said U.K. retail sales rose by a seasonally adjusted 0.3% in July, defying expectations for a 0.1% decline.
Retail sales for June were revised up to a 0.8% gain from a previously reported increase of 0.1%.
Retail sales rose at an annualized rate of 2.8% in July, blowing past expectations for a 1.4% increase, after rising at a rate of 1.6% in the preceding month.
Core retail sales, which exclude automobile sales, were flat last month, compared to expectations for a 0.2% decline, after climbing 1.1% in June.
The ONS said there was no evidence that the Olympics had any impact on retail sales.
The data came one day after the minutes of the Bank of England’s August meeting showed that policymakers voted unanimously to keep U.K. interest rates steady at 0.5% and to leave the quantitative easing program unchanged at GBP375 billion.
Also Wednesday, official data showed that the number of people claiming unemployment benefits in the U.K. fell unexpectedly in July and the nation’s unemployment rate ticked down to 8% from 8.1% in June.
The pound has come under pressure in recent week as sustained concerns over the outlook for the U.K. economy stoked fears that weak economic data could prompt the BoE to implement another round of stimulus measures, which would be negative for the pound.
The euro was also lower against the U.S. dollar, but edged higher against the yen, with EUR/USD down 0.15% to 1.2270 and EUR/JPY inching up 0.09% to 97.16.
The euro was little changed after official data showed that consumer price inflation in the euro zone held steady at 2.4% in July, unchanged from the previous month and in line with market expectations.
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