The British Pound mitigated some of its daily losses against the US Dollar, yet it continued to exhibit a negative stance in the wake of recent UK economic data. UK Retail Sales experienced a significant rebound in May, increasing by 1.2% month-on-month, surpassing expectations and offsetting the revised 1.0% decline observed in April. Traders exercise caution following the collapse of US-Iran talks, prompted by the cancellation of the Swiss summit trip by US Vice President Vance. GBP/USD remains subdued for the third consecutive day, trading around 1.3190 during the early European hours on Friday. The British Pound pares its daily losses against the US Dollar but remains in negative territory following the release of key economic data from the United Kingdom.
The Office for National Statistics released data on Friday, indicating that UK Retail Sales increased by 1.2% month-over-month in May, following a downward revision of 1.0% in April. The market forecast indicated an anticipated increase of 0.5% for the reported month. The core Retail Sales increased by 1.2% month-over-month in May, contrasting with the prior decline of 0.1% (revised from -0.4%) and exceeding the anticipated rise of 0.4%. The annual Retail Sales in the UK registered a growth of 3.2% in May, compared to a revised figure of 0.1% from the previous month, which was initially reported as 0%. This result also surpassed the expectations of 1.9%.
The annual core Retail Sales increased by 4.6% in the same month, compared to April’s 1.1%. The reading exceeded the consensus estimate of 3.3%. The GBP/USD pair experiences declines as the Greenback gains strength, influenced by the prevailing hawkish sentiment regarding the Federal Reserve’s policy outlook. The newly appointed Fed Chairman Kevin Warsh emphasised that “price stability” remains the central bank’s ultimate guiding principle. Almost fifty percent of the Federal Open Market Committee officials suggested that at least one additional rate increase could be required later this year.
Moreover, market caution revived on Friday as US-Iran talks collapsed following a report that US Vice President JD Vance cancelled his planned trip to the Bürgenstock summit. A spokesperson for the Vice President indicated that the logistics of these negotiations “have never been simple or predictable,” emphasising that no departure is imminent until a concrete update is established.