The GBP/USD currency pair came under modest selling pressure on Friday, currently trading just above the 1.3300 level. This fall has been compounded by a resurgence of interest in the US dollar, which further stresses the British pound. Today’s headlines would have you believe that tensions are thawing in the US-China trade war. This has increased both the attractiveness of the Greenback and supporting its strength.
GBP/USD was still feeling a bit defensive near the bottom of the 1.3300s. As the dollar index jumped, market participants started calling the US dollar bullish. This came on the heels of speculation on a thaw in the escalating US-China trade war. These types of announcements usually strengthen investor sentiment, increasing demand for the dollar, adding to pressure on the pound.
Even in the face of rising headwinds for GBP/USD, UK retail sales data released earlier this week impressed to the upside. Consumer demand continues to be strong, as retail sales have unexpectedly skyrocketed. Further, this increase may help strengthen the British pound, indicating that consumer spending in the UK economy is strong. Nevertheless, the prevailing mood across the forex market was one of caution as traders continued to e-watch developments in the world’s trade relations.
The relationship between the Greenback and GBP/USD is a perfect illustration of the intricacies involved in currency trading. The UK’s unexpected improvement in retail sales gives the pound much-needed shot of hope. Exogenous shocks such as US-China trade relations are beyond local control and have a large effect on currency value. Falling rates Analysts continue to caution traders to be on guard. Geopolitical factors are playing a huge role in influencing market trends.