GBP/USD Forecast Live: Retail Sales to Test Pound Sterling Strength

– Written by


Tim Boyer

STORY LINK GBP/USD Forecast Live: Retail Sales to Test Pound Sterling Strength

The Pound to US Dollar (GBP/USD) exchange rate traded without a clear direction on Thursday, as a combination of upbeat UK PMI data and a cautious market mood pulled the pair in opposite directions.

At the time of writing, GBP/USD hovered around $1.3505, having faced narrow volatility throughout the session.

The Pound (GBP) had a muted start to the trading session, drifting lower as markets considered the possible economic consequences of the Middle East crisis, including concerns that the UK government might introduce tax increases later this year.

As the day went on, however, Sterling found renewed support following the release of the UK’s preliminary April PMI data, which exceeded expectations in both the manufacturing and services sectors.

The services sector, in particular, drew focus, with activity rising from 50.5 to 52, outperforming forecasts that had pointed to a slowdown towards the 50 threshold.

The data also revealed stronger-than-expected growth in price pressures.

Reflecting on the results, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said that price growth has surged at a pace rarely observed outside of the pandemic period, indicating that inflation may climb higher than many analysts had projected.

This led markets to revise their expectations for monetary policy, with speculation that the Bank of England (BoE) could still pursue tightening this year helping to underpin the Pound.

The US Dollar (USD) found early support as a cautious market mood boosted demand for safe-haven assets, with investors unsettled by developments in the Middle East.

While the US moved to extend its ceasefire arrangement, Iran signalled it had not formally accepted the agreement, citing the continued US blockade of the Strait of Hormuz. At the same time, reported attacks on vessels in the region added to investor unease.

Ongoing uncertainty and heightened geopolitical tensions dampened market sentiment, helping to underpin the US Dollar.

Short-Term GBP/USD Forecast: UK Retail Sales in Focus

Looking ahead, attention turns to the UK’s March retail sales release on Friday. A slight rebound of around 0.2% growth may offer some support to Sterling, though any upside is likely to be modest.

For the US Dollar, focus will shift to the University of Michigan’s final consumer sentiment reading. If the data confirms a sharp drop in household confidence during April, it could place some pressure on USD.

Broader market sentiment is also expected to remain a key driver of GBP/USD. Continued developments in the Middle East may inject further volatility, with shifts in risk appetite potentially causing fluctuations in the currency pair.

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TAGS: Pound Dollar Forecasts