GBP/USD Soars Above 1.2860 After US Retail Sales Beat Expectations
Thursday saw GBP/USD making a strong recovery, trading back above 1.2860, thanks to a positive trend in UK economic data and better-than-expected US Retail Sales figures. This surge in market sentiment has helped keep the Greenback on the lower side, easing fears of a US recession.
The US Retail Sales growth hit an 18-month high of 1.0% MoM in July, surpassing the forecasted 0.3% and completely reversing the previous month’s -0.2% decline. These positive economic indicators have alleviated concerns of a looming recession in the US. However, bets on a double rate cut from the Federal Reserve in September have been dampened.
On the UK front, Gross Domestic Product (GDP) figures for the second quarter met expectations, with a 0.6% QOQ and 0.9% YoY growth. Additionally, UK Manufacturing Production saw a significant increase of 1.1% MoM in June, surpassing the expected 0.1% and recovering from the previous month’s revised 0.3%.
GBP/USD Price Outlook
Following a bullish recovery on Thursday, GBP/USD has remained above the 50-day Exponential Moving Average (EMA) at 1.2787. The pair experienced a technical bounce after hitting the 1.2800 mark early in the day but failed to reach a new two-week high due to diminishing bullish momentum. Intraday trading is currently hovering just above 1.2850.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency globally, dating back to 886 AD and serves as the official currency of the United Kingdom. It is the fourth most traded currency in the world, accounting for 12% of all transactions, with an average daily turnover of $630 billion. The key trading pairs for GBP include GBP/USD (‘Cable’), GBP/JPY (‘Dragon’), and EUR/GBP. The issuance of Pound Sterling is overseen by the Bank of England (BoE).
The value of Pound Sterling is primarily influenced by the monetary policy decisions made by the Bank of England. The BoE aims for price stability, targeting an inflation rate of around 2%. Adjustments in interest rates are the primary tool used to achieve this goal. Economic indicators such as GDP, Manufacturing and Services PMIs, and employment data also play a significant role in determining the strength of GBP.
One crucial indicator for Pound Sterling is the Trade Balance, which measures the difference between a country’s exports and imports. A positive net Trade Balance strengthens the currency, while a negative balance can weaken it.