Retail sales data out of the UK has rained on the parade enjoyed by the sterling pound up to that point. Lower than expected retail sales for the month of August marks a digression from the wave of positive economic data that led the Bank of England (BoE) to take on an optimistic tone in the meeting minutes released on Wednesday. Retail sales volumes fell 0.9% on the month, disappointing economists who had expected a rise of 0.4%, and down from a 1.1% gain in July. Meanwhile, the annual rate of growth slowed to 2.1% from 3.0%. The previous month’s figure was reported to be boosted by hot weather. On the backs of a strong bullish trend since July, the GBP/USD had witnessed a big move higher after the release of the minutes and another move higher of over a 100 pips following the Federal Reserve’s (Fed) decision not to taper. The currency pair had not looked back until the retail sales data, falling off from near the session high of 1.6155. It was showing a print of 1.6085 at the time of writing. The GBP has been in a remarkably strong bullish trend that was only aided by the optimistic meeting minutes from the Bank of England on Wednesday. At least for now, this marks a clearer divergence between the Fed’s and the BOE’s monetary policies with the former holding on to all extraordinary stimulus efforts and the latter perhaps sounding more optimistic. Karen Jones, Technical Analyst for Commerzbank, has noted that the massive acceleration higher has led the currency pair to take out all short-term resistances and leave the market focused on the 2009-2013 downtend at 1.6333. ‘Despite the directional move seen yesterday we continue to look for this to hold the topside,’ she said. However, the momentum is likely to remain driven by the US dollar. Analysts at Danske Bank believe that the USD-crosses have now become ‘even more US data sensitive as as upcoming US data will be pivotal in judging when or if tapering will start.’ - See more at: http://www.ifamagazine.com/news/lower-than-expected-retail-sales-upset-sterling-pound-283335#sthash.raTMb4ch.dpuf

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