The Pound US Dollar exchange rate is rangebound this afternoon after the Pound was supported following a rebound in retail sales from the UK.
At the time of writing the Pound US dollar exchange rate is trading at around $1.3788.
Pound (GBP) Supported by Upbeat UK Retail Sales Figures
The Pound has been supported today following a partial rebound in UK retail sales figures for February.
Retail sales edged up to 2.1% in February, a sharp increase from January’s -8.2% decline, as the UK economy prepares to reopen from lockdown restrictions in the coming weeks.
Investors are becoming increasingly optimistic surrounding the recovery of the economy, as comments from Bank of England (BoE) policymaker Michael Saunders this afternoon hinted that the UK’s growth outlook is better than first expected.
Speaking to an online webinar earlier in the afternoon he said:
‘Data so far suggest that Q1 GDP will be less weak than expected in the February monetary policy report (MPR), and the outlook for activity in Q2 also is probably better than in the MPR central forecast. This partly reflects the effects of higher government output.’
‘The current plans envisage that restrictions across the UK will be eased somewhat more rapidly than assumed in the February MPR. Moreover, the recent budget provided significant further near-term support for the economy.’
US Dollar (USD) Muted Against the Pound as US Consumer Spending Falls
The US Dollar has been muted against the Pound heading into the weekend after reports showed that US consumer spending fell more than expected in February.
Consumer spending dropped by 1% in February after rebounding 3.4% in January, according to the US Commerce Department.
Despite the decline in consumer spending, markets are expecting a large rebound in the coming months as the federal government dish out $1,400 stimulus checks as part of the $1.9 trillion stimulus package signed into law by President Joe Biden.
US Dollar investors are becoming optimistic surrounding the currencies recovery as more US citizens are vaccinated and the retail sectors reopens across the country.
Pound US Dollar Exchange Rate Outlook: UK Q4 GDP Data in Focus
Heading into next week, the key focus for Pound investors will be the final Q4 GDP data reading from the UK.
The final reading is expected to show a 1% growth in Q4, which although modest keeps the UK from entering a double-dip recession, and bolstering Sterling.
For US Dollar investors, the latter half of the week will see the release of ISM manufacturing data from the US and initial jobless claims for the week ending 26th March.
If US jobless claims continue to decline, the US Dollar could see itself heading higher against the Pound.