Pound US Dollar Exchange Rate Falls as Discouraging Data Further Sours Moods
The Pound US Dollar (GBP/USD) exchange rate drops for the third consecutive day as disappointing UK retail sales data miss market forecasts.
At time of writing, GBP/USD dropped to a low of $ 1.3189, relatively unchanged from this morning’s opening levels.
Pound (GBP) Slides as Poor Retail Data Compounds Inflation Squeeze
The Pound (GBP) falters as retail sales data fell unexpectedly for the month of February, falling by 0.3%, compared to the 1.9% rise from January, with internet sales dropping by 4.8%.
Findings from the Office for National Statistics also showed that sales at non-food stores rose by 0.6%, driven by clothing and department stores. This points to the easing of restrictions and the return to wider socialising contributing to the increase.
However, the shock slump in sales growth also raises concerns that the UK’s cost-of-living crisis may already be impacting consumer spending.
This comes after an uninspiring Spring Statement left many investors warning that the Chancellor of the Exchequer Rishi Sanuk’s measures do not go far enough to support struggling households. With inflation hitting the highest in three decades, investors were pinning their hopes on a more substantial relief program, but such moves have yet to materialise.
US Dollar (USD) Softens in Risk-On Trade
The US Dollar (USD) is subdued this afternoon as a prevailing risk-on mood limits demand for the safe-haven currency.
Also weighing on the US Dollar is the release of the University of Michigan’s US consumer sentiment index. March’s finalised figures saw consumer sentiment revised lower, with the index striking its worst levels since 2011 as households worried about reducing living standards in the face of rapidly rising inflation.
Drawing moderate support and helping to mitigate some of the US Dollar’s losses were rising Federal Reserve rate hike bets. The Fed’s continued hawkish outlook provides some tailwind for the ‘Greenback’ as investors await a potential 50bps rate hike from the Fed at the May meeting.
Pound Dollar Forecast: Could Poor Data Further Waver the Cable?
Looking ahead, with both the Pound and US Dollar feeling the effects of poor data, headwinds could provide fluctuations in the cable as there is no further UK data due out today.
The Pound could be open to market movements amid the ongoing crisis in Ukraine, with soaring living costs as a result of the war weighing heavily on the cable, with global risk appetite being the main driver. Speeches planned from the Fed could affect the USD today, but with the hawkish stance on combating US inflation already established at the previous policy meeting, it remains to be seen if the USD is sensitive to any further news.