Forex - GBP/USD steady after U.S. retail sales data

The pound was almost unchanged against the dollar on Tuesday after official data showed that U.S. core retail sales rose at the fastest pace in seven months in July.  

GBP/USD hit 1.5434 during European afternoon trade, the session low; the pair subsequently consolidated at 1.5462, edging up 0.01%.

Cable was likely to find support at 1.5380 and resistance at 1.5520, Monday’s high.

The Commerce Department said U.S. core retail sales, which exclude automobile sales, rose 0.5% in July, compared to forecasts for a 0.4% increase. Core retail sales for June were revised up to 0.1% from a flat reading.

Overall retail sales rose by a seasonally adjusted 0.2% last month, just short of expectations for a 0.3% increase. Retail sales figures for June were revised up to a 0.6% gain from a previously reported increase of 0.4% the report said.

The data reinforced the view that the economic recovery is strong enough for the Federal Reserve to begin phasing out its asset purchase program later this year.

Earlier Tuesday, official data showed that the rate of consumer inflation in the U.K. eased in line with forecasts in July.

The Office for National Statistics said consumer price inflation ticked down to 2.8% on a year-over-year basis, in line with economists’ expectations, from 2.9% in June.

Core CPI, which excludes food, energy, alcohol, and tobacco costs rose by a seasonally adjusted 2% in July, below expectations for a 2.3% increase.

Investors were looking ahead to U.K. employment data on Wednesday after the Bank of England announced plans last week to keep interest rates on hold at record lows as long as the U.K. unemployment rate remains above 7%.

Sterling moved higher against the euro, with EUR/GBP down 0.41% to 0.8566.

In the euro zone, a report on Tuesday showed that the closely watched ZEW index of German economic sentiment rose to a five-month high of 42.0 in August from July’s reading of 36.3. Economists had forecast a reading of 40.0.

The index of economic expectations for the euro zone was also higher, increasing to 44.0, the highest since April 2010, up from 32.8 in July.

A separate report showed that industrial production in the euro zone rose 0.3% in June from a year earlier, more than expectations for a 0.2% increase.