The once-mighty British pound is finally making a comeback! SINGAPORE – The Singapore dollar is now trading at 1.3484 against the US dollar, up 0.49% for the day. The GBP/USD has found a lot of bullish strength in the Euro breaking above three distinct resistance lines. Currently, it tests the nearest major resistance at 1.3493. The currency has advanced 1.5% this week to its highest levels since Feb. 2022.
On Friday, the pound soared double-digits, thanks largely to a strong retail sales report spurring optimism on the U.K. On a monthly basis, retail sales jumped 1.2%, a sharp upside surprise from a downwardly revised 0.3% March increase. This figure was well above the market consensus of 0.2%. It should be welcome news as part of a broader positive trend in consumer spending across the UK.
Annual retail sales were similarly impressive, as they advanced a whopping 5%. This figure was up from a downwardly revised 1.9% and above the expected 4.5%. We’ve seen four straight months of retail sales increases on a monthly basis, a winning streak we haven’t experienced in over three years, back in 2020. This trend is another indicator that UK consumers are becoming more confident.
The impressive retail sales figures coincide with higher-than-expected inflation rates in April, leading analysts to raise expectations regarding the Bank of England’s (BoE) monetary policy decisions. The BoE is preparing for its next policy meeting on June 18. Most are expecting the central bank to hold interest rates at their current level given the strength of recent economic data.
Consumer spending has become the saving grace of an economy that has struggled in recent months. The latest retail sales data signifies an increasing willingness among consumers to spend, which analysts view as a sign of optimism about economic stability going forward.
During the European session, GBP/USD was up on the day at 1.3484, with the next key support seen at 1.3393 and thereafter at 1.3367. What the recent price action demonstrates is just how resilient the pound has been. If recent action is any guide, it still has the ability to power through even more resistance.
Consensus market observers were looking for robust growth in April’s retail sales. The reality was so much better than what they expected, that it caused them to reconsider their expectations for the market. Today, there are no key releases from the US. Remarks from three Federal Open Market Committee (FOMC) members may impact market sentiment.