FTSE 100 searches for impetus, with retail sales data on deck

U.K. stocks swung between small gains and losses early on Thursday, with traders remaining cautiously on the sidelines ahead of a reading on retail sales, which could influence the path for U.K. interest rates.

What are markets doing?

The FTSE 100 index  rose 0.1% to 7,793.92, slightly rebounding after a 1.1% loss Wednesday.

The pound  climbed to $1.3366 from $1.3348 late Wednesday in New York. Sterling fell to a fresh 2018 low on Wednesday, after official figures showed U.K. inflation unexpectedly fell in April, which dampened expectations for a Bank of England interest rate rise in the summer.

What is driving the market?

The muted action in London came as traders waited for the latest U.K. retail sales data, due at 9:30 a.m. London time, or 4:30 a.m. Eastern Time. Economists expect a 0.4% drop year-on-year in April, but a flat reading month-on-month.

Investors in the U.K. are watching data releases closely, after BOE Governor Mark Carney made clear recently that the central bank’s next policy move depends on an improvement in British economic health.

More broadly, traders were still digesting the minutes from the U.S. Federal Reserve’s May 1-2 meeting, which were released late Wednesday. The minutes suggest the U.S. central bank is on track to hike interest rates in June and is keeping calm about the inflation outlook.

Staying in the U.S., President Donald Trump rekindled concerns of a global trade war, announcing an investigation that could lead to import tariffs on cars.

What are strategists saying?

“After Wednesday’s surprise decline in headline inflation illustrated a return to the Goldilocks (not too hot, not too cold) economy, it will take a decent surprise to the upside in today’s retail sales to even come close to convincing some pound traders that August’s hike remains a possibility,” said Jasper Lawler, head of research at London Capital Markets, in a note.

“Should the data beat, the pound could comfortably find itself through $1.34, whilst a disappointing read could quickly send the pound back to test $1.33,” he added.

Stock movers

Shares of Tate & Lyle PLC  rose 4.2% after the food ingredients maker said adjusted profit rose 13% in the last fiscal year.

Kingfisher PLC  fell 3% after the do-it-yourself retailer said first-quarter sales fell due to bad weather.

Shares of Daily Mail & General Trust PLC lost 3.9% after the newspaper publisher reported a drop in revenue in the first half of fiscal 2018.