GBP/USD Exchange Rate Slumps as US Retail Sales Beat Expectations

GBP/USD Exchange Rate Falls as US Analysts Show Bullishness on Economy

UPDATE: The Pound US Dollar exchange rate has fallen back this afternoon following the release of the US retail sales figures for May, which rose for their second month by 0.5%.

The monthly figures also rose by 0.5%, however this narrowly missed the 0.6% consensus.

Analysts at the financial services company Wells Fargo were upbeat, saying:

‘Assuming the labor market remains healthy, as we expect, consumer spending growth should be solid in the quarters ahead.’

No-deal Brexit fears are also weighing on Sterling, as the Institute of Directors urge businesses to step up their preparations, leaving many investors feeling jittery.

Pound US Dollar (GBP/USD) Exchange Rate Edges Higher as US Traders Anticipate Retail Data

The Pound US Dollar (GBP/USD) exchange rate fell today and is currently trading around $1.2664 on the inter-bank market.

The US Dollar (USD) edged up against the Pound (GBP) as oil prices remain in focus following yesterday’s attack on two containers in the Gulf of Oman, which has lent some support for the ‘Greenback’.

Michael Hewson, Chief Market Analyst at CMC Markets UK, said the oil price rebound was overstated, saying:

‘With the US pinning the blame firmly on the Iranians the scope for a misstep is only likely to increase, hence the rebound in oil prices which characterised yesterday’s price action, and has seen prices also push higher this morning. While oil prices rebounded, the bounce was much shallower than might be expected given that prices are already near five-month lows.’

US Dollar (USD) traders are awaiting today’s economic data releases, with US retail sales figures for May being in focus.

With the consensus being that there will be an increase of 0.4% in sales following the previous month’s stagnant reading, we could see the USD/GBP exchange rate rise.

These will be followed by the US Michigan Consumer Sentiment Index figures for Jun, which are expected to ease.

US industrial production figures for May, meanwhile, are expected to improve.

GBP/USD Exchange Rate Sinks as Conservative Leadership Contest Continues

The Pound (GBP), meanwhile, has remained subdued today as traders’ concern focuses on the Conservative Party leadership race, with Boris Johnson, the current favourite, coming under increasing pressure to take part in TV debates.

Jeremy Hunt, Mr Johnson’s main rival, lashed out, saying:

‘What would Churchill say if someone who wants to be Prime Minister of the United Kingdom is hiding away from the media, not taking part in these big occasions?’

Today will also see Mark Carney, the Governor of the Bank of England, deliver a speech.

If he makes any dovish comments about the state of the UK economy we could see Sterling further weaken.

With Boris Johnson being a known hard-Brexiter, and perceived as likely to lead the UK into a no-deal exit from the European Union, markets are naturally anxious to see whether he will become the next PM.

Sterling, as a result, has remained subdued as UK markets remain effectively on stand-by until further political developments.

Pound US Dollar (GBP/USD) Exchange Rate Outlook: Brexit and Tory Party Leadership to Remain in Spotlight

Pound (GBP) traders will be looking ahead to Monday’s inflation report hearings where any indication that the UK economy is struggling likely to further weigh on market sentiment in GBP.

USD traders, meanwhile, will be looking further ahead to Tuesday, which will see the publication of a range of building and housing data and with an expected increase we are likely to see the ‘Greenback’ benefit.

The Pound US Dollar (GBP/USD) exchange rate is likely to react to ongoing development in the Conservative Party leadership race, although traders will be looking ahead to next Wednesday’s Fed interest rate decision before they make any sudden moves on the US currency.


David Moore

Contact David Moore