The Pound Sterling (GBP) edges higher to near 1.3470 against the US Dollar (USD) during the European trading session on Friday after recovering earlier losses. The GBP/USD pair ticks up as the Pound Sterling trades higher after the release of the upbeat United Kingdom (UK) Retail Sales data for January and the preliminary S&P Global Purchasing Managers’ Index (PMI) data for February.
The Office for National Statistics (ONS) has reported that Retail Sales, a key measure of consumer spending, unexpectedly grew at a robust pace of 1.8% month-on-month (MoM). Economists expected the consumer spending measure to have risen at a moderate pace of 0.2% from 0.4% in December.
Theoretically, higher Retail Sales diminish dovish speculation for the Bank of England’s (BoE) monetary policy outlook. However, the data is unlikely to do so as UK inflation has cooled down in January and the job market conditions have deteriorated further in the three months ending in December.
UK’s Composite PMI has unexpectedly rose to 53.9 from 53.7 in January, while it was expected to drop to 53.4. Faster growth in the overall business activity was led by higher-than-expected manufacturing sector output. The Manufacturing PMI has arrived at 52.0 against estimates and the previous reading of 51.8.
Meanwhile, the US Dollar (USD) trades broadly firm ahead of the release of the preliminary United States (US) Q4 Gross Domestic Product (GDP) data, which will be published at 13:30 GMT. As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades firmly near an almost four-week high of 98.00 posted on Thursday. The US economy is expected to have grown at an annualized pace of 3%, faster than the previous reading of 4.4%.
The US Dollar has been outperforming its peers as Federal Open Market Committee (FOMC) Minutes of the January policy meeting showed on Wednesday that officials see no rush for interest rate cuts, with inflation remaining persistently above the Federal Reserve’s (Fed) 2% target.
