- The Pound Sterling performs strongly against its peers on robust UK Retail Sales data for April.
- Month-on-month, UK Retail Sales grew strongly by 1.2%.
- US President Trump’s new bill moves to the Senate after passing in the House of Representatives.
The Pound Sterling (GBP) posts a fresh three-year high near 1.3500 against the US Dollar (USD) in European trading hours on Friday, following the release of the stronger-than-projected United Kingdom (UK) Retail Sales data for April.
The Office for National Statistics (ONS) reported that Retail Sales, a key measure of consumer spending, rose at a robust pace of 1.2% on the month, compared to estimates of 0.2% and the 0.1% growth seen in March, revised lower from 0.4%. On year, the consumer spending measure grew by 5%, faster than expectations of 4.5% and the prior release of 2.6%.
According to the Retail Sales report, Food stores, Departmental stores, and Household goods stores saw a substantial increase in sales receipts.
Signs of robust household spending are expected to further add to expectations that the Bank of England (BoE) officials will not lower interest rates in the June meeting. This week, hotter-than-expected UK Consumer Price Index (CPI) data for April also forced traders to pare BoE dovish bets.
Meanwhile, flash UK S&P Global Purchasing Managers’ Index (PMI) data for May came in better-than-expected. Still, overall business activity remained contracting as the Composite PMI improved to 49.4, against estimates of 49.3 and from 48.5 in April. Overall business activity declined at a slower pace due to a robust increase in the service sector output. The Services PMI came in at 50.2, higher than expectations of 50.0 and the prior release of 49.0. Meanwhile, the Manufacturing PMI declined at a faster pace to 45.1 from 45.4 in April, below the 46 expected.
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.58% | -0.58% | -0.56% | -0.32% | -0.71% | -0.90% | -0.40% | |
| EUR | 0.58% | 0.00% | 0.03% | 0.27% | -0.12% | -0.31% | 0.19% | |
| GBP | 0.58% | -0.00% | 0.02% | 0.27% | -0.09% | -0.30% | 0.20% | |
| JPY | 0.56% | -0.03% | -0.02% | 0.26% | -0.15% | -0.34% | 0.17% | |
| CAD | 0.32% | -0.27% | -0.27% | -0.26% | -0.41% | -0.57% | -0.07% | |
| AUD | 0.71% | 0.12% | 0.09% | 0.15% | 0.41% | -0.17% | 0.38% | |
| NZD | 0.90% | 0.31% | 0.30% | 0.34% | 0.57% | 0.17% | 0.50% | |
| CHF | 0.40% | -0.19% | -0.20% | -0.17% | 0.07% | -0.38% | -0.50% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Daily digest market movers: Pound Sterling advances against US Dollar as Greenback suffers
- The Pound Sterling outperforms the US Dollar on Friday on the back of upbeat UK Retail Sales data. While growing concerns over the United States (US) fiscal imbalances have also kept the US Dollar on the backfoot. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, declines to near 99.40.
- Financial market participants are worried that US President Donald Trump’s new bill, which comprises tax cuts, increased spending on defense and border enforcement, cuts in the Medicaid program, and subsidies on green energy, is expected to worsen the already overstretched fiscal deficit.
- According to the nonpartisan Congressional Budget Office, Trump’s new bill would increase the US debt by $3.8 trillion over the decade, which is currently $36.2 trillion. Such a scenario would further damage the US Sovereign credit rating, which was already downgraded by Moody’s to Aa1 from Aaa last week.
- President Trump’s new bill has been approved by the Republican-controlled House of Representatives and is advanced to the Senate, where it is expected to face significant objections. “I expect there will be considerable changes in the Senate,” Republican Senator Ted Cruz of Texas said, Reuters reported.
- On the monetary policy front, Federal Reserve (Fed) officials are expected to continue arguing in favor of keeping interest rates in their current range of 4.25%-4.50% for a longer time, as Trump’s tax bill could be another trigger for high inflation in the economy. Policymakers have already acknowledged that patience is required amid unusually high uncertainty in the wake of new economic policies announced by US President Trump.
Technical Analysis: Pound Sterling posts fresh three-year high near 1.3500
The Pound Sterling jumps to near 1.3500 against the US Dollar on Friday. The near-term trend of the GBP/USD pair remains bullish as the 20-day Exponential Moving Average (EMA) is sloping higher around 1.3320.
The 14-day Relative Strength Index (RSI) breaks above 60.00. Should the RSI hold above that level, a fresh bullish momentum would be triggered.
On the upside, the 13 January 2022 high of 1.3750 will be a key hurdle for the pair. Looking down, the 20-day EMA near 1.3320 will act as a major support area.
Economic Indicator
Retail Sales (MoM)
The Retail Sales data, released by the Office for National Statistics on a monthly basis, measures the volume of sales of goods by retailers in Great Britain directly to end customers. Changes in Retail Sales are widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the MoM reading comparing sales volumes in the reference month with the previous month. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
