Good data on retail sales in the UK supported the British pound in the morning, which resumed its upward trend against the US dollar, reaching 2 highs.
On the one hand, the report indicates that the pace of retail sales in the UK slowed, however, on the other hand, the data came out better than the forecasts of economists, who did expect a decline in sales.
Strong consumer spending growth will have a positive impact on UK economic growth in the 2nd quarter of this year, and a positive outcome on Brexit will allow the Bank of England to continue raising interest rates, which is necessary in recent years to maintain inflation at acceptable levels of about 2.0%.
According to the National Bureau of Statistics, retail sales increased by 0.3% in August 2018 compared to the previous month. Let me remind you that sales jumped by 0.9% in July. Economists had forecast a 0.3 percent decline in retail sales.
As noted in the report, sales growth was noted in almost all categories of goods.
The British pound continued to move upwards in the pair with the US dollar and updated weekly highs around 1.3215. One question remains whether buyers will be able to stay above this level until the closing of the day, which will indicate the continuation of the upward trend in the pound. If the bears manage to return the GBP/USD to the level of 1.3215, the pressure on the pound will increase again, as there will be a demolition of a number of stop orders of major players hoping for further growth of the pound. Support in this case will be the levels of 1.3170 and 1.3120.
OECD lowers global growth forecast
Today a report was published from the Organization for Economic Cooperation and Development, in which a number of concerns related to trade wars were noted.
The OECD revised its forecast for world economic growth for 2018 and 2019. An increase of 3.7% is expected, while an increase of 3.8% and 3.9% is expected. As noted in the OECD, despite the fact that in the coming years the growth of the world economy will remain strong enough, trade conflicts will have a negative impact on investment and slow down the pace of activity.
New Zealand's economy shows good growth
The New Zealand dollar rose significantly against the US dollar after data was released which showed that the country's economy in the 2nd quarter of this year grew at a faster pace than expected. According to the report, New Zealand's GDP growth was 1.0% compared to the 1st quarter of this year.
Compared to the same period of the previous year, the economy grew by 2.8%. Economists had expected a more restrained growth rate of 0.8%, while the Reserve Bank of New Zealand had forecast an increase of only 0.5%.
As noted in the report, the agricultural sector, as well as the service sector, made a good contribution to GDP.
This report will allow the RBNZ to forget about the need to lower interest rates to further stimulate economic growth, which will return the strength of the New Zealand dollar.
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