Pound US Dollar Exchange Rate Drops in Response to Weak UK retail Sales Data
The Pound US Dollar (GBP/USD) exchange rate is trading significantly lower today in response to weaker-than-anticipated UK retail sales data.
At the time of writing, the GBP/USD exchange rate is trading at approximately $1.2893, roughly down 1% from today’s opening levels.
Pound (GBP) Nosedives as UK Retail Sales Figures Fall Short of Expectations
The Pound (GBP) is dropping against the US Dollar (USD) today after an abysmal UK retail sales print.
In March, sales growth plunged by 1.4%. This is considerably worse than the 0.3% decline markets expected and comes after a 0.5% contraction in February.
The release is thought to show how the UK’s cost of living crisis is starting to impact the economy as consumers spent less on fuel and food amid soaring prices. The largest contributor was non-store retailing, such as online sales, with a 7.9% decline.
In addition, the Pound is also suffering from weaker-than-expected PMI figures.
The preliminary services PMI figures for April missed market forecasts of 60, slipped from the previous score of 62.6 and printed at 58.3.
This is the sharpest decline in the services sector in a single month since the end of 2021 when Omicron was negatively impacting business activity.
Moreover, the manufacturing PMI preliminary figures for April printed at 55.3, slightly above February’s 55.2 but below expectations of 54.
Later today, the Pound may be influenced by a speech from Bank of England (BoE) Governor Andrew Bailey.
Will Bailey strike a dovish tone? If so, it may place additional pressure on Sterling’s appeal.
US Dollar (USD) Firms after Fed Signposts Interest Rate Hike
The US Dollar (USD) is strengthening against the Pound (GBP) today after Federal Reserve Chairman Jerome Powell suggested an interest rate hike is ‘on the table’.
Attending an International Monetary Fund (IMF) panel yesterday, Powell suggested the Fed may raise rates by 50-basis points at the next meeting.
According to Powell, ‘it is appropriate to be moving a little more quickly’ as US inflation surges.
In turn, this is bolstering demand for the ‘Greenback’ as USD investors price-in an aggressive rate hike at the Fed’s May meeting.
Looking ahead, USD may be impacted by the US preliminary PMI figures for April, scheduled for release this afternoon.
The services PMI is expected to hold steady with an index score of 58. Meanwhile, the manufacturing PMI is forecast to slip marginally from 58.8 to 58.2. If this prints true, it may take the shine off USD exchange rates.