Pound US dollar (GBP/USD) exchange rate flat amid stagnant UK retail sales
The pound US dollar (GBP/USD) exchange rate is treading water this morning, following news of stagnant UK retail sales.
At the time of writing, GBP/USD is trading at around US$1.2440, showing little movement from the morning’s opening rates.
Pound (GBP) muted amid stagnant retail sales
The pound (GBP) is largely static this morning, amid news that UK retail sales stagnated in March.
Rather than rising by 0.3% as expected, retail sales showed no signs of growth on a monthly basis. This even marked a downtick as February’s figure was revised higher to 0.1%.
As prices continue to rise in the UK on the back of persistent inflationary pressures, this is resulting in slowing consumption.
Heather Bovill, Senior Statistician at the Office for National Statistics (ONS), commented:
‘Retail sales registered no growth in March. Hardware stores, furniture shops, petrol stations and clothing stores all reported a rise in sales. However, these gains were offset by falling food sales and in department stores where retailers say higher prices hit trading.’
Investors may also be shying away from Sterling this morning ahead of a duo of speeches from Bank of England (BoE) policymakers.
Deputy Governors Sarah Breeden and Dave Ramsden are scheduled to speak this afternoon. If they echo Governor Andrew Bailey’s dovish comments earlier this week, the pound could slide.
US dollar (USD) undermined by lack of data
Due to a lack of impactful macroeconomic data, the US dollar (USD) is off to a slow start this morning, despite bearish trade.
Overnight, Israel allegedly enacted a drone and missile attack on the Iranian city of Isfahan. While the origin of the attack remains unclear, it marks a potential escalation in the conflict in the Middle East which has sapped the market mood.
This is sparking concerns that the Middle East is on the cusp of a regional war, which may send shockwaves across the globe.
Normally, the dismal market mood would serve to underpin the US dollar with safe-haven flows, but investors seem holistically nervous. The hope remains that the situation can be resolved peacefully, but markets are on tenterhooks across the board.
Pound US dollar exchange rate forecast: UK PMIs in focus
Looking ahead for the pound, the core catalyst of movement is likely to be the latest batch of preliminary PMI readings.
In April, overall economic activity between the UK’s manufacturing and service sectors is expected to have ticked higher.
If this forecast proves accurate, the pound could strengthen on Tuesday as it may prompt investors to pushback existing interest rate cut bets. As the readings could show economic resilience, the UK economy might be able to withstand unchanged interest rates for longer.
For the US dollar, preliminary PMI readings for April are also due for release on Tuesday. With both service and manufacturing sectors expected to have grown a touch, USD may enjoy a boon against its peers.