Pound US dollar (GBP/USD) exchange rate teeters near two-and-a-half year high
The pound US dollar (GBP/USD) exchange rate is trading near a two-and-a-half year high attained earlier this morning following the publication of the UK’s latest retail sales index.
At the time of writing, GBP/USD is trading at around $1.3284, virtually unchanged from this morning’s opening levels.
Pound (GBP) buoyed by upbeat UK retail sales data
The pound (GBP) is being supported by the publication of the UK’s latest retail sales index this morning which is propelling Sterling to multi-year highs against several of its peers.
The data revealed an unexpected surge in consumer spending in August, with the figure climbing to 1%, up from a previous reading of 0.7%, outpacing an anticipated 0.4% increase.
ONS Chief Economist Grant Fitzner commented:
‘Retail sales rose in August as warmer weather and end of season promotions helped to boost sales, most notably for clothing and food shops. Supermarkets, in particular, contributed to the largest annual rise for food sales since the summer of 2021.’
This has served to underpin GBP exchange rates at the end of this week following softer-than-expected UK inflation print on Wednesday and the Bank of England’s (BoE) dovish decision to keep interest rates unchanged on Thursday.
US dollar (USD) rebounds following Fed Rate Cut
The US dollar (USD) has managed to recoup the majority of its losses from yesterday following Wednesday evening’s Federal Reserve interest rate decision.
The central bank decided to enact a whopping 50-basis point interest rate cut, which shocked markets and saw USD slump to multi month lows.
However, amid a somewhat cautious market mood, the safe-haven USD is trending mostly flat against its peers moving into this morning’s European session.
With US data thin on the ground today, any shifts in market sentiment could still see USD falter against its peers.
GBP/USD exchange rate forecast: PMIs to drive movement?
Looking ahead, the primary catalyst of movement for the pound US dollar exchange rate at the start of next week will likely be the publication of the UK’s and the US’s latest PMI indices for September.
Should the UK’s latest PMI data show another strong services and manufacturing reading, GBP exchange rates could firm on Monday.
Turning to the US dollar, the latest US PMI data is forecast to report a mixed reading, with the manufacturing index forecast to remain in contraction territory (a reading below 50) while the services index is expected to remain firmly in expansion territory (a reading above 50).
Will the expected mixed reading see USD exchange rates start the week dipping against its peers?