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16/08/24
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GBP Extends Gains on Strong Retail Sales
On Friday, the British pound extended its gains, and GBP/USD traded at about 1.2887, up 0.31% for the day in the European session. The pound has had a winning week and it climbed 1%.
The UK economy has had more good news as July retail sales rebounded by 0.5% m/m, after June’s revised drop of 0.9% and as per the market estimate. GDP surged 1.4% annually, versus June’s -0.8% and matching the market estimate. The pound has risen after the positive retail sales data.
The retail sales bounce reflects summer discounts as well as purchases related to the Paris Olympics and the Euro 2024, like apparel. With inflation finally under control and sitting near 2%, consumers are opening their purses and wallets. The positive retail sales report came after the solid GDP release yesterday. The UK economy rose 0.6% in the second quarter, a second consecutive quarter of growth.
Although the economy is showing some strength in Q2, this may not have much effect on the rate path of the Bank of England. The growth increase may not be sustainable and BoE policymakers have said that they are more concerned about inflation, especially service inflation, which is still much higher than the BoE’s target of 2%.
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