GBP/CAD bounces off two-week low on stronger UK retail sales growth

Key points

The British Pound firmed against the Canadian Dollar on Friday, looking to snap a four-day streak of losses, after UK retail sales grew more than expected in June despite persistent inflation.

The Sterling was still on course for its steepest weekly decline against the Canadian Dollar since late January, after data showed UK inflation had eased at a faster rate than anticipated in June. The inflation print urged investors to reduce their bets that UK interest rates will peak at 6%.

Data by the Office for National Statistics showed earlier on Friday that retail sales in the United Kingdom had increased at a monthly rate of 0.7% in June, far exceeding market expectations of a 0.2% growth. Increases were observed in most sectors, including food, non-food and non-store retailing.

Retail sales excluding fuel sales rose 0.8% month-over-month in June, again easily outpacing expectations of a 0.2% growth.

The data added to the case for further policy tightening by the Bank of England this year.

Meanwhile, CAD traders now look to Canadian retail sales figures, due out at 12:30 GMT today, for more clues over Bank of Canada interest rate outlook.

Retail sales probably rose at a monthly rate of 0.5% in May, according to market consensus, following a 1.1% gain in April.

Retail sales excluding automobile sales are expected to increase 0.3% month-over-month in May, following a 1.3% surge in April.

As of 7:39 GMT on Friday GBP/CAD was edging up 0.10% to trade at 1.6965. Yesterday the minor Forex pair went down as low as 1.6904. The latter has been the pair’s weakest level since July 6th (1.6850).

GBP/CAD was set to register a 2.08% weekly loss.