- GBP/USD has nearly touched 1.3468, marking its highest level since February 2022 as of Wednesday.
- The UK’s retail sales could drop again in April, potentially marking three months of consecutive declines.
- The US 30-year bond yield has experienced setbacks after reaching 5.15% on Thursday, a peak not seen in 19 months.
On Friday, GBP/USD gained roughly a quarter during Asian trading, hovering around 1.3450. The pair appears stronger, with the British Pound attracting interest after a consumer confidence index exceeded expectations in the UK. Traders are watching closely for the upcoming retail sales data, which is anticipated to show a monthly decline for April.
In May, the UK’s consumer confidence index improved by three points, now at -20, which was better than the expected -22 and an improvement over April’s -23. Nevertheless, there’s a sense of caution among consumers since the index remains significantly below historical averages.
On the flip side, British pound data indicates some challenges. The seasonally adjusted UK manufacturing index surprisingly fell to 45.1 from the previous 45.4 in April, while the market had forecasted a reading of 46.0. On a brighter note, the UK’s Services Business Activity Index increased to 50.2 in May, surpassing April’s 49.0 and the expected figure of 50.0.
GBP/USD continued to shift as the US dollar weakened, influenced by a decline in US Treasury yields. The US 30-year bond yield retreated from a 19-month high of 5.15% amid growing worries about the rising US budget deficit.
The U.S. House of Representatives narrowly approved Trump’s budget on Thursday, aiming to offer tax incentives linked to tips and loans for US-made vehicles. The Congressional Budget Office projects this proposal might boost the deficit by $3.8 billion.
Economic indicators
Retail Sales (Month-over-Month)
The retail sales figures published by the National Statistics office reflect the volume of products sold directly to consumers by UK retailers. Fluctuations in these sales serve as a key indicator of consumer spending habits. The percentage change illustrates the sales rate month over month, with higher numbers generally viewed as a positive for the British Pound, while lower figures are seen negatively.
