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GBP/USD Slips from Highs as UK Retail Stats Disappoint

Last week’s high:

3798

Pound Falls from Best Levels versus US Dollar

The Pound to US Dollar exchange rate was unable to close the week near its best levels, as Sterling was dragged down by disappointing UK ecostats during Friday trade.

Friday saw the publication of Britain’s January retail sales results, which came in short of expectations in all major prints. The monthly retail sales figure came in at only 0.1%, while the yearly figure came in well short of the forecast 2.6% and only reached 1.6%.

Despite this, the Pound still sustained notable gains against the US Dollar last week due to broad weakness in the US currency. As the global growth outlook has risen, investors are less eager to hold onto ‘safe haven’ currencies like the US Dollar.

The US Dollar did benefit from solid data throughout the week, including higher than expected consumer sentiment data from Michigan University on Friday. However, most of the strong US data was brushed over as investors focused on the rising global growth outlook.

USD Outlook: UK Wage Growth Data Could Influence Bank of England Bets

With the US economic calendar looking a little quieter next week, the Pound to US Dollar exchange rate is more likely to be influenced by key UK data and any developments in global market sentiment.

Wednesday will see the publication of many job stats from Britain, including unemployment and wage growth data from December and jobless claims data from January. Pound investors are likely to focus on the upcoming wage stats, which could indicate how close domestic wages are to catching up with domestic inflation.

If UK wages beat expectations, investors may become more confident that the Bank of England (BoE) will hike UK interest rates multiple times in 2018, which could boost the Pound too. Sterling could also be influenced by Thursday’s UK Gross Domestic Product (GDP) projections.

However, if Brexit uncertainties worsen again the Pound’s potential for gains could be limited.

GBP/USD movement could also be affected by US home sales data and PMI projections from Markit next week.

Key Events

21st February

09:30 UK Public Sector Net Borrowing

09:30 UK Job Market Report

09:30 UK Jobless Claims

14:45 US Markit PMI Projections

15:00 US Existing Home Sales

19:00 US Federal Reserve Minutes

22nd February

09:30 UK Growth Rate

09:30 UK Business Investment

13:30 US Jobless Claims

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To keep up to date with the US Dollar, visit the USD blog in our Currency News section.

 

Arron Morris
Senior Currency Broker
T: 01442 892 065

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