GBP struggles to attract buyers

GBP/USD slipped lower as Retail Sales in the UK undershot expectations

In the month of July, retail sales, including auto fuel, experienced a noticeable decline of 1.2% compared to the previous month. This was in contrast to the consensus expectation of a milder 0.6% decrease. Moreover, sales that excluded auto fuel also faced a decline of 1.4%, falling short of the anticipated decrease of 0.7%. This dip in sales marks a departure from the trend observed over the past four months, where sales consistently met or exceeded expectations.

Despite the subdued performance in retail sales, it’s noteworthy that this outcome did not significantly alter the policy stance of the Bank of England (BoE). The impact on market sentiment was relatively limited, with the current pricing by swap markets declining only by a modest 2 basis points (bps) to 31 bps in relation to the upcoming September meeting. Read more…

GBP/USD Forecast: Pound Sterling struggles to attract buyers

GBP/USD registered small gains last week as Pound Sterling managed to hold resilient against its rivals on hawkish Bank of England (BoE). The pair, however, stays on the back foot to start the new week as investors refrain from taking large positions ahead of key data releases and events.

After the data from the UK revealed last week that wage inflation held strong and core consumer inflation remained sticky early summer, markets started to price in a higher terminal BoE rate. Commenting on the UK inflation readings and how they could influence the BoE’s monetary policy, “the BoE will hike key rates another two times until year-end. It might have to take further action in 2024 as well,” said Commerzbank analysts. Read more…

Pound Sterling remains lackluster ahead of key PMI figures

The Pound Sterling (GBP) trades directionless on Monday as Bank of England (BoE) policymakers seem baffled about September’s monetary policy meeting. July’s economic indicators remained mixed: on the labor market, a hiring slowdown was offset by strong wage growth, whereas on the price front softer headline Consumer Price Index (CPI) due to lower gasoline prices was neutralized by persistently high core inflation.

UK retail sales contracted significantly as store sales were washed out by rainy weather. However, demand at online stores increased supported by promotions, suggesting that retail demand is majorly stable. Investors will focus on preliminary PMI data for August this week for further guidance on September’s monetary policy meeting. Read more…