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GBP/USD to weaken amid slowing UK retail sales?

Stack of US Dollar banknotes

Pound US dollar (GBP/USD) exchange rate listless amid absence of data

The pound US dollar (GBP/USD) exchange rate is rangebound this morning, as a lack of data releases limits Sterling.

At the time of writing, GBP/USD is trading at around US$1.2694, showing little movement from the morning’s opening rates.

Retail slowdown to undermine GBP?

The pound (GBP) began today’s session in a muted capacity, and may struggle to find support over the course of the day’s trade.

With minimal macroeconomic data to go on, investors are likely shifting away from Sterling in favour of other currencies. Additionally, mixed levels of risk appetite could be undermining the pound, owing to its increasingly risk sensitive nature.

Turning to tomorrow, the pound could weaken against most major peers following the release of the latest distributive trades data from the Confederation of British Industry (CBI).

The CBI is expected to publish the index for June, which is forecast to show a decline in retail sales. The reading is expected to fall from a figure of 8 in May to 5.

This could weigh on GBP by suggesting falling consumer spending. Furthermore, it shows a decrease from recent recoveries, which could further undermine GBP.

Fed speeches to strengthen USD?

Thus far, the US dollar (USD) is trading without a clear direction, as investors look ahead to impactful data releases today.

First up, the latest CB consumer confidence data is due for publication. In June, sentiment amongst US households is expected to have slipped from a reading of 102 in May down to 100.

This could undermine the ‘greenback’ as it would show falling confidence amongst US consumers. As the American economy is driven by consumption, this could unsettle USD exchange rates.

This is followed by a duo of speeches from Federal Reserve officials later today. If both speakers maintain a hawkish stance, the ‘greenback could strengthen. However, if there is a hint of imminent interest rate cuts, the US dollar could weaken against its peers.

Turning to tomorrow, the US dollar may struggle to find a clear direction to a lull in impactful macroeconomic releases.

This could leave the currency exposed to shifts in the market mood. As a safe haven currency, if the mood improves and risk appetite increases, USD may falter against its peers. However, the reverse is true – a downbeat mood could strengthen the ‘greenback’ against its peers.

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