Sterling Pound Rallies on Upbeat Retail Sales Data and BoE Decision

The  British pound today rallied higher against the  US dollar from the  mid-Asian session as  markets digested yesterday’s Fed monetary policy statement. The  pound’s rally was further boosted by  the  release of  upbeat UK retail sales data in  the  early European session.
The  GBP/USD currency pair today rallied from an  initial low of  1.2612 to  a  high of  1.2707 then retraced some of  its gains.
The  currency pair’s initial rally was largely due to  the  negative investor sentiment towards the  US dollar following yesterday’s FOMC rate hike. The  fact that the  Federal Reserve maintained a  bullish outlook despite the  many headwinds facing the  US economy did not resonate with investors leading to  a  selloff by  the  greenback. The  release of  the  positive UK retail sales data for  November by  the  Office for  National Statistics also boosted the  pair. The  core retail sales data came in  at  an  annualized 3.8% versus the  expected 2.3%, which surprised most investors. The  headline retail sales also beat expectations by  coming in  at  an  annualized 3.6% beating consensus estimates by  1.6%.
The  pair dropped slightly after the  Bank of  England left its monetary policy unchanged, but later rallied slightly despite the  release of  positive US initial jobless claims data. The  BoE’s Monetary Policy Committee left its bank rate at  0.75% and  the  asset purchase program was maintained at   £435 billion.
The  currency pair’s short-term performance will likely be affected by  tomorrow’s UK public sector borrowing data, and  the  US GDP and  PCE data.
The  GBP/USD currency pair was trading at  1.2671 as  at  14:20 GMT having rallied from a  low of  1.2612. The  GBP/JPY currency pair was trading at  141.38 having dropped from a  high of  142.11.

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