The British pound dipped 0.30% earlier today but has managed to recover the losses. In the European session, GBP/USD is trading at 1.2451, up 0.12%.
Retail Sales Misses Estimate
The UK release retail sales were flat in March, after a revised 0.1% gain in February and missing the market estimate of 0.3%. Fuel sales were higher but were offset by weaker food sales. This was a disappointment for retailers as hopes that the Easter holiday would boost March sales failed to materialize. On a yearly basis, retail sales rose 0.8%, up from a revised -0.3% in February and just above the market forecast of 0.7%.
The weak release was impacted by heavy rains in March, which kept consumers away from shops. Even without the adverse weather, consumers are sour about the economy and holding tight to the purse strings. Retail sales have been bumpy in 2024 but could show improvement in the coming months. The weather will improve in the coming months and the Paris Olympics and Taylor Swift concerts are expected to lead to an increase in consumer spending and demand.
The Bank of England remains cautious about trimming rates and the consensus view is that the BoE won’t lower rates until September. The BoE remains cautious, especially after Federal Reserve Chair Powell said this week that it will delay rate cuts due to rising inflation. Morgan Stanley is more dovish and expects a rate cut in June, arguing that UK inflation has dropped to 3.2% and will fall below the BoE’s 2% target in the second quarter.
GBP/USD Technical
- GBP/USD tested support at 1.2418 and 1.2401 earlier. Below, there is support at 1.2367
- There is resistance at 1.2452 and 1.2469