Pound US dollar (GBP/USD) exchange rate dented following UK retail sales figures
The pound US dollar (GBP/USD) exchange rate is on the back foot this morning following the publication of the UK’s latest retail sales data.
At the time of writing, GBP/USD is trading at around $1.2913, down roughly 0.2% from this morning’s opening levels.
Pound (GBP) undermined by slump in consumer spending
The pound (GBP) is struggling to garner investor attention this morning following the publication of the UK’s latest retail sales data.
The Office for National Statistics (ONS) confirmed that retail sales volumes plunged by 1.2% in June following May’s 2.9% surge, missing market expectations of a more modest 0.4% contraction.
The lacklustre reading was primarily put down to poor weather and economic conditions, however, the sharp decline in consumer spending has weighed on GBP this morning.
Charlie Huggins, of the investment firm Wealth Club, commented:
‘Retail sales volumes came in weaker than expected in June, following a stronger-than-expected May. This continues the volatility in monthly sales patterns seen since the turn of the year, with strange weather and economic caution playing a role. Consumers weren’t exactly splashing the cash in June – sales in every category, excluding fuel, declined. But we should remember that May sales were especially strong.’
US dollar (USD) muted ahead of Fed speeches
The US dollar (USD) is trapped in a narrow range against the majority of its peers this morning as investors are reluctant to place any aggressive bets ahead of two Federal Reserve speeches later in the day.
Both John Williams and Raphael Bostic are seen as two of the more hawkish members of the Fed. Any comments on keeping interest rates higher for longer could lend USD some modest support moving into the second half of today’s European session.
However, as markets are almost fully pricing in an interest rate cut in September, will the upcoming speeches fall on deaf ears and fail to lift USD?
GBP/USD exchange rate forecast: risk appetite to drive movement?
Looking ahead, the primary driver of movement for the pound US dollar exchange rate at the start of next week will likely be market mood, as both UK and US data will be scarce.
Should a risk-on mood prevail, GBP/USD could be lifted thanks to the pound’s increasingly risk-sensitive nature. However, should markets turn cautious, GBP/USD could falter thanks to the US dollar’s status as a safe-haven currency.
The only data release of note for the currency pairing during the first half of next will come in the form of both UK and US preliminary PMI data for July.
Scheduled for release on Wednesday, should either respective index show any unexpected contractions, GBP/USD could experience volatility in mid-week trade.