U.K. Retail Sales Jumps Higher in June, Supporting the British Pound Rally

GBP was boosted by ongoing appetite for risk, with Cable trading up to 1.6540 highs. The pair moved in to the 1.6500 area in early trade before spiking higher after U.K retail sales surged 1.2% m/m in June and 2.9% y/y. U.K. BBA mortgage approvals also improved to 35.2k in June, which was better than expected, while net leding reached GBP 2.6 bln. EUR-GBP also hit lows of 0.8604 before European names provided support ahead of the 0.8600 level. GBP movement from here will be dependent on risk appetite, which is holding up today and should encourage further dip buying. Cable sell orders are noted in to 1.6550 and stops are building through 1.6570 and also lie above 1.6600. Gains from here may struggle given the recent interest by long term accounts to hedge between the 1.6500 and 1.6600 area.