Pound Sterling attracts bids on upbeat UK Retail Sales data
- The Pound Sterling rebounds against its major peers after the UK ONS reported upbeat Retail Sales data for March.
- Traders are confident of a 25 bps interest rate reduction by the BoE in May.
- De-escalation in the US-China trade war has supported the US Dollar.
The Pound Sterling (GBP) bounces back against its major peers on Friday after the release of surprisingly positive United Kingdom (UK) Retail Sales data for March. The Office for National Statistics (ONS) has reported that retail sales, a key measure of consumer spending, rose by 0.4% month-on-month, while economists had anticipated a 0.4% decline. In February, the consumer spending measure grew by 0.7%, revised lower from 1%.
Year-on-year Retail Sales surprisingly grew at a faster pace of 2.6% compared to the prior release of 2.2% and the moderate pace of 1.8% expected.
Theoretically, upbeat UK Retail Sales data force traders to pare bets favoring an expansionary monetary policy stance by the Bank of England (BoE). However, traders are increasingly confident that the BoE will reduce interest rates by 25 basis points (bps) to 4.25% in the May policy meeting.
Severe uncertainty over the global economic outlook in the face of tariffs announced by United States (US) President Donald Trump earlier this month and slower-than-expected Consumer Price Index (CPI) data for March are major catalysts behind firm BoE dovish bets.
BoE Governor Andrew Bailey warned that “tariffs” announced by the US and “countermeasures” by other nations are expected to bring “shockwaves” to the UK economic growth, while talking to CNBC television on the sidelines of the International Monetary Fund’s Spring Meetings in Washington. However, Bailey ruled out the possibility of a recession. "I don’t think the UK economy is close to recession at the moment," Bailey said. On Wednesday, he stressed the need to consider trade war risk. "We do have to take very seriously the risk to growth, Bailey said.
Meanwhile, investors look for trade negotiations between UK Chancellor of the Exchequer Rachel Reeves and Washington on Friday. Ahead of negotiations, Reeves said at US television outlet Newsmax on Thursday that she is confident they can “strike a deal”.
British Pound PRICE Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.23% | 0.25% | 0.49% | 0.12% | 0.17% | 0.35% | 0.40% | |
| EUR | -0.23% | 0.02% | 0.24% | -0.13% | -0.07% | 0.12% | 0.16% | |
| GBP | -0.25% | -0.02% | 0.21% | -0.14% | -0.08% | 0.09% | 0.11% | |
| JPY | -0.49% | -0.24% | -0.21% | -0.36% | -0.33% | -0.16% | -0.12% | |
| CAD | -0.12% | 0.13% | 0.14% | 0.36% | -0.04% | 0.23% | 0.25% | |
| AUD | -0.17% | 0.07% | 0.08% | 0.33% | 0.04% | 0.19% | 0.20% | |
| NZD | -0.35% | -0.12% | -0.09% | 0.16% | -0.23% | -0.19% | 0.01% | |
| CHF | -0.40% | -0.16% | -0.11% | 0.12% | -0.25% | -0.20% | -0.01% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Daily digest market movers: Pound Sterling aims for firm-footing against US Dollar
- The Pound Sterling strives to gain ground near the intraday low of 1.3280 against the US Dollar (USD) during European trading hours after the release of the upbeat UK Retail Sales data. However, the GBP/USD pair is still down almost 0.3% as the US Dollar (USD) is outperforming on hopes of a de-escalation in the US-China trade war.
- The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rebounds to near 99.70 after a steep correction on Thursday. Fears of a spiralling trade war between the world’s two largest powerhouses started diminishing after the White House indicated that a deal could be done and signaled that both nations could reduce tariffs before coming to the table.
- US Treasury Secretary Scott Bessent stated on Wednesday that both nations will reduce additional tariffs imposed recently. “Neither side believes that these are sustainable levels,” Bessent said. Hopes of a de-escalation in the tariff war have got an extra boost as Beijing has indicated that it is considering tariff exemptions for some US goods. According to a Bloomberg report, China is considering pausing a 125% import duty on US medical equipment and some industrial chemicals.
- On the economic front, stronger-than-expected US Durable Goods Orders data for March has indicated that tariff policies by US President Trump have started feeding into business activities. The cost of orders for durable goods received by business owners rose at a robust pace of 9.2%, beating estimates of 2% and the prior release of 0.9%. A multi-fold increase in the economic data is evidence of Federal Reserve (Fed) officials’ stance of avoiding any monetary policy adjustments before getting greater clarity on how new economic policies will shape the economic outlook.
Technical Analysis: Pound Sterling declines to near 1.3300
The Pound Sterling trades lower to near 1.3300 against the US Dollar in Wednesday’s European session. The outlook of the pair remains firm as all short-to-long Exponential Moving Averages (EMAs) are sloping higher.
The 14-day Relative Strength Index (RSI) cools down to near 63.00 after turning overbought. This indicates a mild correction in the pair after a strong rally but doesn’t invalidate the upside trend.
On the upside, the psychological level of 1.3500 will be a key hurdle for the pair. Looking down, the April 3 high around 1.3200 will act as a major support area.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.