Pound US dollar (GBP/USD) exchange rate climbs following retail sales report
The pound US dollar (GBP/USD) exchange rate strengthened this morning after surprisingly positive UK retail sales data.
At the time of writing, GBP/USD is trading at $1.3047, up over 0.2% on the day.
Pound (GBP) firms as UK sales unexpectedly rise in September
The pound (GBP) enjoyed a strong start to today’s session thanks to the release of some better-than-forecast UK data.
New figures from the Office for national Statistics (ONS) revealed that British retail sales grew by 0.3% in September. While this was a slowdown from August’s 1% growth, it was far better than the 0.3% contraction expected by City economists.
Retail sales rose 0.3% in September 2024, following a rise of 1.0% in August 2024.
Computers and telecoms stores grew strongly but were partly offset by falls in supermarkets.
Read more ➡️ https://t.co/jP5Yn4lRHs pic.twitter.com/47ckvVvmsF
— Office for National Statistics (ONS) (@ONS) October 18, 2024
This helped to alleviate fears around the UK’s slowing economy, thereby boosting the pound after what has been a bruising week.
Niel Birrell, Chief Investment Officer at Premier Milton Investors, argues that strong wage growth is an important factor in today’s results, adding:
‘The consumer sector is very important within the economy and even though this is just one month’s data, it suggests the economy is more robust than was thought.’
US dollar (USD) muted amid cautiously upbeat mood
Meanwhile, the safe-haven US dollar (USD) is subdued so far today, as a lack of data leaves the currency to be driven by risk appetite.
The market mood is currently cautiously upbeat, thereby pressuring USD. Investors are hopeful that the world’s key central banks will be able to achieve ‘soft landings’ – bringing inflation back to target without triggering recessions – thanks to recent interest rate cuts.
However, the escalating crisis in the Middle East is keeping a lid on market risk appetite. With the violence raging on, anxiety over the geopolitical situation is weighing on markets.
GBP/USD exchange rate forecast: Fed speeches to dent the US dollar?
As the day unfolds, we could see Sterling trim some of this morning’s gains as the GBP/USD exchange rate stabilises. A lack of US and UK data could then see market risk appetite drive any further movement in the pairing, with a cautiously positive mood potentially supporting the pound.
British economic news and speculation ahead of the UK Autumn Budget could also impact GBP. If there are any new reports around how anticipated tax hikes could slow the UK economy, Sterling may cede ground to the ‘greenback’.
Later this afternoon and evening, three Federal Reserve officials are due to deliver speeches. Any signals that the Fed could steadily cut interest rates over the coming months could place some pressure on the US dollar. Conversely, a pushback on rate cut bets could lift the American currency.