The British pound has steadied on Friday, after sliding 1.6% in the past two days. In the European session, GBP/USD is trading at 1.2510, down 0.10% on the day at the time of writing.
Retail Sales point to weak Christmas spending
UK retail sales posted a small gain of 0.2% m/m in November. This was a rebound from the 0.7% decline in October but missed the market estimate of 0.5%. Retail sales growth was hampered by weak clothing sales, which fell to their lowest volume since January 2022, as well as the wet weather. Annually, retail sales rose 0.5%, following a downwardly revised 2% gain in October and below the market estimate of 0.8%.
The weak retail sales report indicate that consumers are being cautious during the key Christmas shopping period, which is dampening economic activity. The ‘tax and spend’ Autumn budget hasn’t improved consumer confidence, as consumers remain squeezed by high prices and elevated interest rates.
UK inflation rose to 2.6% y/y in November from 2.3% a month earlier. This was an eight-month high and has raised concerns that the economy will enter a “stagflation” phase in the new year, which is marked by low growth and high inflation. The economy has contracted for two straight months and the Bank of England is projecting that inflation will keep rising and moved closer to 3% in 2025.
The BoE maintained the cash rate at 4.75% on Thursday, as expected. The BoE monetary policy summary said that policy would need to remain restrictive until the upside risk to inflation had eased and that the central bank would take a “gradual” approach to easing policy. This could mean a rate cut at the next meeting in February, but that would be contingent on inflation moving lower, closer towards to BoE 2% inflation target.
GBP/USD technical
-
There is resistance at 1.2554 and 1.2614.
-
1.2442 and 1.2382 are the next support levels.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD extends recovery beyond 1.0400 amid Wall Street's turnaround
EUR/USD extends its recovery beyond 1.0400, helped by the better performance of Wall Street and softer-than-anticipated United States PCE inflation. Profit-taking ahead of the winter holidays also takes its toll.
GBP/USD nears 1.2600 on renewed USD weakness
GBP/USD extends its rebound from multi-month lows and approaches 1.2600. The US Dollar stays on the back foot after softer-than-expected PCE inflation data, helping the pair edge higher. Nevertheless, GBP/USD remains on track to end the week in negative territory.
Gold rises above $2,620 as US yields edge lower
Gold extends its daily rebound and trades above $2,620 on Friday. The benchmark 10-year US Treasury bond yield declines toward 4.5% following the PCE inflation data for November, helping XAU/USD stretch higher in the American session.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.