Sterling bulls were installed with fresh inspiration during Wednesday’s trading session after U.K retail sales smashed markets expectations by rising 1.0% in August.
Retail sales remain resilient and have risen for three months in a row despite inflationary pressures, which is likely to fuel speculation of the BoE raising interest rates in November. The growth rate for July was also revised higher by the ONS from 0.3% to 0.6% which added to the overall positivity of the report. With expectations mounting over the BoE raising rates sooner than expected, Sterling which remains sensitive to monetary policy speculation is likely to venture higher.
Sterling/Dollar ventured higher following the release with prices clipping 1.3600. Bulls remain in control above 1.3500 with 1.3700 on the cards if the current upside momentum holds.
Commodity spotlight – Gold
Gold ventured towards $1315 during Wednesday’s trading session ahead of the heavily anticipated FOMC rate decision later in the day. With Gold notoriously known to be very sensitive to rate hike expectations, today is likely to be a very eventful trading session for the metal. Although it is widely expected that US interest rates will be left unchanged, sellers may make an appearance to attack if Yellen adopts a hawkish tone and during her press conference.
From a technical standpoint, a breakdown below the tough $1300 support should encourage a further decline towards $1280. In an alternative scenario, if $1300 defends then price could bounce back towards $1315 and $1325, respectively.