Home » GBP » GBP to USD » GBP/USD Exchange Rate Plummets to 37-Year Low on Abysmal UK Retail Sales Release

GBP/USD Exchange Rate Plummets to 37-Year Low on Abysmal UK Retail Sales Release

GBP/USD Exchange Rate Nosedives on UK Retail Sales Miss

The Pound US Dollar (GBP/USD) exchange rate is plummeting this morning as dire UK retail spooks GBP investors.

At the time of writing the GBP/USD exchange rate is trading at around $1.1363, which is roughly down 0.7% from this morning’s opening rate.

Pound (GBP) to Struggle amid Poor Sales Data?

The Pound (GBP) is down against most of its peers this morning and will likely continue to face headwinds in response to downbeat UK sales data.

August’s figures were expected to report sales growth fell from 0.4% to -0.5%. However, this morning’s figures revealed a much deeper-than-expected contraction of 1.6%.

The much larger-than-expected contraction in UK retail sales is fuelling concerns over the looming recession and the cost-of-living crisis.

Lisa Hooker, industry leader for consumer markets at PwC explains that:

‘Shoppers are simply buying less to offset price increases. For the first time, grocery sales volumes, taking out the impact of the inflation, actually fell below pre-pandemic levels, showing that shoppers are wasting less and being forced to be more careful with what they put in their trolleys.’

The bleak economic outlook is likely to see the Pound limp over the finishing line this week particularly if it prompts GBP investors to readjust their expectations for the next Bank of England (BoE) interest rate decision.

US Dollar (USD) to Strengthen on Upbeat US Consumer Sentiment?

The US Dollar (USD) is strengthening this morning after being dented yesterday afternoon by a surprise contraction in August’s factory output.

The US Dollar is recouping its losses from yesterdays amid a prevailing risk-off mood ahead of impactful data this afternoon.

The expectation of the University of Michigan’s September consumer sentiment is driving up the demand for USD. The safe-haven currency will likely continue to strengthen as US investors turn their attention to internal trading.

If September’s index reports another improvement in US consumer morale, then USD could continue to make significant gains throughout the afternoon.

However, it’s also possible that cheered by positive data and early morning gains that US investors seek opportunities abroad and begin risk-sensitive trading.

It is also possible that they decide to cash in on their earnings which could dent USD’s modest gains.

Comments are closed.