Pound US Dollar Exchange Rate Benefits from Britain’s Strong Retail Sales Report
Despite the US Dollar (USD) attempting to claw back losses, the Pound US Dollar (GBP/USD) exchange rate is advancing yet again today. The Pound (GBP) found some fresh support in today’s UK retail sales report.
Since opening this week at the interbank level of 1.38, GBP/USD has been trending with an upside bias. GBP/USD even touched on a monthly best level of 1.40 after an early-week surge.
However, GBP/USD has since been tumbling from those highs. GBP/USD slipped to nearer the week’s opening levels last night, and while it is advancing again today it is still trending in the interbank region of 1.38.
Looking ahead to next week, much more influential US data will be published and the Federal Reserve will hold its April policy decision.
Pound (GBP) Exchange Rates Find Support in UK Retail Sales Report
After mixed movement on mixed ecostats for most of the week, a solid upside surprise in Britain’s March retail sales supported the British currency today.
UK retail sales surged 5.4% month-on-month, rather than the expected rise of 1.5%, and the yearly figure rose to a highly impressive 7.2%.
Analysts speculate that businesses will now be hoping for these promising stats to mean that retail activity gathers momentum, rather than weakening after an initial reopening bump.
US Dollar (USD) Exchange Rates Remain Weak as Federal Reserve Dovishness Expected to Continue
The US Dollar’s weak streak continues into the end of the week. While the US Dollar attempted a mid-week recovery on US economic optimism and safe haven demand, concerns about a dovish Federal Reserve are once again weighing on the US currency today.
The Federal Reserve will hold its April policy decision next week. Analysts increasingly expect that the Fed will follow the European Central Bank’s (ECB) dovish ‘wait and see’ stance, rather than show any sign of tapering signals.
These expectations are weighing on the US Dollar’s appeal today.
The US Dollar remains unappealing overall amid low expectations for any hawkish shifts from the Federal Reserve any time soon.
Pound US Dollar (GBP/USD) Exchange Rate Awaits Federal Reserve Decision Next Week
Next week’s UK economic calendar will be a little quieter, with not much notable UK data on the way. Instead, investors will be focused on UK coronavirus and political news, with more of a focus on the US Dollar as well.
Many key US ecostats will be published next week, including growth rate and PCE inflation rate figures.
However, the biggest focus next week is likely to be the Federal Reserve’s April policy decision, set for Wednesday.
Speculation over whether or not the Fed will show any new hawkish signals have been driving the US Dollar recently. Analysts currently expect the bank will remain cautious and dovish.
According to Masafumi Yamamoto, Chief Currency Strategist at Mizuho Securities:
Powell has to reiterate the continuation of easy monetary policy just like Lagarde,
As a result, the Dollar is likely to fall against the Yen, but the larger trend for the Dollar is still mixed. The Dollar can still rise against commodity currencies if commodity prices start falling again.’
With the Federal Reserve in focus, any surprises from the bank next week could cause big movement in the Pound US Dollar (GBP/USD) exchange rate.