GBP/USD Steady At 1.28 After UK Retail Sales Beat Expectations
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The British pound held firm at 1.28 against the U.S. dollar on Tuesday, following a stronger-than-expected retail sales report that boosted confidence in the UK economy. According to the Office for National Statistics (ONS), retail sales rose 0.7% in June, significantly outperforming analysts’ expectations of a 0.2% increase. This surprise uptick has sparked hopes that the UK consumer sector remains resilient despite ongoing inflation and high interest rates.
The data shows that food stores and non-store retailing, including online sales, led the gains. Consumer sentiment appeared to improve slightly in June as wages outpaced inflation for the first time in over a year, giving households some relief from the cost-of-living crisis. The rise in retail sales has strengthened expectations that the UK economy may avoid a recession in the short term.
Market reaction was muted, however, as traders weigh whether the Bank of England (BoE) will take this data into account during its next policy meeting. While retail figures are encouraging, inflation remains sticky, and the central bank has signaled a cautious approach to rate adjustments. With CPI still hovering above the 2% target, policymakers may opt to keep interest rates higher for longer.
Meanwhile, the U.S. dollar remains strong due to robust economic data and continued hawkishness from the Federal Reserve. This strength has limited further upside for the pound, even as UK fundamentals improve. Analysts note that the GBP/USD pair could remain range-bound unless there’s a significant shift in central bank policy from either side.
Political stability in the UK and ongoing efforts to curb inflation may support sterling in the near term. However, currency markets remain highly sensitive to macroeconomic updates and central bank commentary. If future UK data continues to show economic resilience, GBP/USD could attempt another breakout toward 1.30—but any unexpected downturn or dovish BoE signals might push it back below 1.27.
