The British pound has posted considerable losses in the Tuesday session. In North American trade, the pair is trading at 1.3160, down 0.57% on the day. On the release front, British employment numbers disappointed the markets. Wage growth remained pegged at 2.5%, matching the estimate. Unemployment rolls expanded by 7.8 thousand, higher than the estimate of 2.3 thousand. There are no major U.S indicators. In the U.S, Federal Reserve Chair Jerome Powell testifies before the Senate Banking Committee.
After a soft first quarter, U.S retail sales reports have rebounded in the second quarter. Core retail sales were revised upwards to 0.8% in May, and the June gain of 0.5% edged above the forecast of 0.4%. Retail sales gained 0.4%, and were up an impressive 6.6% on an annualized basis. Consumer spending is a key driver of economic growth, and a tight labor markets and firming inflation are further indications that the economy is in excellent shape. The Fed is widely expected to raise rates again at the September meeting, with odds of a quarter-point hike at 87%, according to the CME Group.
The trade war between the U.S and China is raising concerns not just on the equity markets but at the Federal Reserve as well. On Friday, Dallas Fed President Robert Kaplan said he would have to downgrade his economic outlook for the economy if the tariff battle continues. Kaplan said that U.S tariffs on steel and aluminum imports had dampened capital expenditures plans and further trade tensions could lead to currency fluctuations and geopolitical instability.
