Release of the UK retail sales report for April this morning turned out to be a positive surprise. While retail sales were 4.9% YoY lower in April, the market expected a drop of 7.1% YoY. On a month-over-month basis retail sales showed an unexpected increase of 1.4% (exp. -0.2% MoM). This was the first positive MoM reading since data for January 2022.
However, this does not change much in terms of expected recession in the United Kingdom. Spike in inflation will put a drag on consumer spending in the months to come and such positive retail sales readings are unlikely to be a new trend. Nevertheless, solid release provided some support for the British pound which is ranked among the best performing G10 currencies today.
Taking a look at GBPCHF chart at D1 interval, we can see that the pair took a hit in recent days on the back of Swiss franc strengthening. However, pair managed to halt declines today following the release of UK retail sales data for April. Drop was halted at the 1.21 price zone that served as a support and lower limit of trading range started in March. From a technical point of view, the range was maintained and a recovery towards the upper limit in the 1.24 area.