Pound Drops From 2-Month Highs as UK Retail Sales Disappoint

The  British pound today fell from yesterday’s 2-month highs against the  US dollar following Theresa May‘s victory in  the  no-confidence vote against her on  Wednesday. The  GBP/USD currency pair today declined as  markets monitored Brexit developments amid low volatility.
The  GBP/USD currency pair today dropped from a  high of  1.2993 in  the  Asian session to  a  low of  1.2926 in  the  European session.
The  cable’s decline today could largely be attributed to  Brexit concerns as  the  UK government insists that it cannot rule out a  hard Brexit. However, markets were slightly pacified by  Theresa May’s call to  the  Labour Party leader Jeremy Corbyn to  share his Brexit ideas with her government so that the  country can move forward. The  release of  the  weak UK retail sales data for  December also contributed to  the  cable’s decline. According to  the  UK’s Office for  National Statistics, headline retail sales declined by  0.9% in  December versus the  expected 0.8% contraction, while the  core retail sales dropped by  1.3% versus the  expected 0.6% decline.
The  pound also rallied against the  euro this week and  is set to  close the  week with its biggest weekly gain against the  single currency since September 2017. Despite all the  turmoil witnessed in  the  UK political scene, it turns out that this might be a  week of  record gains for  the  British pound.
The  currency pair’s short-term performance is likely to  be affected by  Brexit headlines and  UK political developments.
The  GBP/USD currency pair was trading at  1.2940 as  at  11:52 GMT having dropped from a  high of  1.2993. The  EUR/GBP currency pair was trading at  0.8815 having rallied from a  low of  0.8770.

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