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Pound US Dollar Exchange Rate Lifted by Above-Forecast UK Retail Figures

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Pound US Dollar (GBP/USD) Exchange Rate Climbs a Pound Boosted by Retail Data

The Pound US Dollar exchange rate has risen this morning as the optimistic retail sales data provided a boost to Sterling.

At time of writing the GBP/USD exchange rate is at $1.3328.

Pound (GBP) Buoyed by Pre-Omicron Retail Figures

The Pound has been lifted this morning by better than expected retail sales figures. Sales in November rose by 1.4% above forecasts of 0.8% and was attributed to early Christmas Shopping Black Friday.

Despite these optimistic figures, British retailers have signalled that footfall has begun to fall in the face of the Omicron variant. This is further supported by a reported fall in consumer confidence to -15. Joe Staton, Gfk client strategy director, was pessimistic regarding the UK’s recovery this year:

‘We end 2021 on a depressing note and it looks like it will be a bleak midwinter for UK consumer confidence, possibly with new COVID curbs, and little likelihood of any real uplift in the first months of 2022.’

The news is likely to underscore any gains made by the currency and further highlights the inflationary pressures highlighted by the Bank of England (BoE) following their decision to raise interest rates yesterday. The move was a shock to investors and caused the Pound to jump against its rivals, as markets have previously priced out an interest rate rise by the central bank. Members of the BoE’s monetary policy committee (MPC) voted 8-1 in favour of the rate rise.

US Dollar (USD) Muted Following Central Bank Policy Meetings

The US Dollar has remained under pressure today as its rivals were strengthened by yesterday’s central bank announcements, following the Federal Reserve’s meeting on Wednesday.

The Fed announced that it would double the pace at which it will end its bond-buying programme in March, signalling multiple imminent interest rate hikes in 2022. Fed Chair Jeremy Powell was confidence that the country was heading into 2022 with ‘strong growth and full employment’, and that their policy decisions were to directly combat rising inflation.

Bob Michele, chief investment officer at JPMorgan Asset Management, had the following view on the Fed’s policy decision:

‘What we’re seeing from the Fed is that they’re beginning the process of re-establishing their credibility. In the last year, it had come into question as we in the market had watched inflation accelerate with little sign it was going to level off or peak and were bewildered that the Fed was supplying as much accommodation as it was.’

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