Pound US Dollar Exchange Rate News: GBP/USD Climbs on UK Retail Rebound

Pound US Dollar Exchange Rate Firms Despite Grim UK Economic Outlook

The Pound US Dollar (GBP/USD) exchange rate strengthens modestly this morning as UK retail sales rose better than expected.

At time of writing the GBP/USD exchange rate is trading around $1.1913, a 0.46% jump from this morning’s opening levels.

Pound (GBP) Rallies on Retail Recovery

The Pound is enjoying moderate success this morning against its peers as retail sales grew better than expected. Forecasts of a 0.3% increase were met with a 0.6% jump.

Following on from dismal readings in the last two months, it was the first increase in sales since July, and only the second this year. However, retail sales are still languishing 0.6% lower than pre-pandemic levels. Comparing sales to October 2021 makes for further concerning reading, as sales were 6.1% lower. Providing another modest lift to Sterling were the second consecutive improvement of consumer confidence.

However, the spike in retail sales is hardly likely to inspire much confidence in investors. A rare improvement in the retail sector looks to be an anomaly. With the country in recession, experts are warning a bleak outlook for the retail sector. Office for National Statistics (ONS) Director of Economic Statistics Darren Morgan said of the data:

‘Retail sales increased in October, although this is likely a rebound effect after weak sales last month as many retailers closed or operated differently on the extra bank holiday for the Queen’s funeral.’

Meanwhile, following his autumn statement, Chancellor Jeremy Hunt is optimistic he can remove trade barriers with the EU. Speak this morning, Hunt is confident of the long-term benefits of Brexit:

‘I am confident we will be able to remove the vast majority of trade barriers with the European Union (EU) outside the single market. We can find other ways to more than compensate for the advantages of being in the single market.’

US Dollar (USD) Undermined by Improving Market Mood

Meanwhile, the US Dollar is losing ground this morning in the wake of an upbeat market mood.

Despite the slowing of safe-haven flows, a perpetually hawkish Federal Reserve looks to keep the ‘Greenback’ propped up. Comments from several Fed policymakers warned of the necessity of interest rates rising above 5%.

Minneapolis Fed President Kashkari appeared to be particularly hawkish as he wasn’t convinced by softening inflation. Kashkari warned that ‘we cannot be overly persuaded by one month’s data’. 

Pound US Dollar Forecast: BoE MPC Speeches to Boost the Pound?

Looking ahead, the Pound US Dollar exchange rate could see further movement with a speech from Jonathan Haskel, an external member of the BoE Monetary Policy Committee (MPC). The speech will be focused on fiscal policy, and more than likely a reaction to yesterday’s autumn statement.

Meanwhile, a speech from Boston Fed President Susan Collins could see another hawkish boost for the ‘Greenback’.

Danny Tingle

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