Pound US Dollar Exchange Rate Hits One-Month Low as UK Retail Sales Fall

The Pound US Dollar (GBP/USD) exchange rate has weakened since markets opened this morning following an unexpected fall in UK retail sales during July.

At the time of writing the GBP/USD pairing are trading around the $1.3618 level as the US Dollar continues to find support on the back of a sour market mood.

Pound (GBP) Dips on Disappointing UK Retail Sales Data

The Pound has found itself struggling across the board this morning following the release of the latest retail sales figures from the UK.

Retail sales fell unexpectedly to -2.5% during July, as the boost from the Euro 2020 competition the month previous eased off.

Martin Beck, senior economic advisor to the EY ITEM Club commented on the latest figures, saying:

‘Looking ahead, the normalisation of spending patterns is likely to remain a key theme. Increased opportunities for social consumption, and a high degree of pent-up demand for these services, points to consumers switching back to spending a higher proportion of their money in these areas, at the expense of the retail sector.’

Sterling could be open to further losses throughout the day if the US Dollar continues to strengthen against the sour market mood.

US Dollar (USD) Supported on Back of Risk-Off Trade

The US Dollar has been supported against the Pound this morning as a cautious market mood bolsters the appeal of the ‘Greenback’.

The US Dollar continues to find support on the back of the recent Federal Market Open Committee (FOMC) meeting minutes from Wednesday evening.

Richard Hunter, head of markets at interactive investor commented on the outcome of the FOMC meeting minutes:

‘While no date has yet been confirmed, there is an increasing split within its members and it appears increasingly likely that the taper will begin before the end of the year.’

‘US investors have an increasing list of concerns to contend with, as the Delta variant persists in parts of the country, unemployment still remains above pre-pandemic levels and the spectre of inflation looms.’

If the market mood becomes more cautious the US Dollar will see itself pushing higher heading into the weekend.

Pound US Dollar Exchange Rate Outlook: Flash PMI’s in Focus

Heading into next week, Pound investors will be looking towards the latest flash PMI figures from the UK for August.

Whilst not as influential as the final figures, the flash PMI’s will give an indication into how the UK economy is currently performing.

US Dollar traders will be looking to their own flash manufacturing PMI, again not as influential as the ISM manufacturing PMI, the figures could give an additional boost to the ‘Greenback’ at the start of the week.

Georgina Clissold

Contact Georgina Clissold