The latest retail sales figures from the UK have shown an impressive recovery following the weather-related weakness for the previous month, with the reading for April showing a rise of 1.6% m/m. The pound has moved back above the 1.34 following the release as it looks to recover from its lowest level of the year against the US dollar which was seen yesterday.
The recent declines in the GBPUSD have been not just a function of a weaker sterling with the US dollar appreciation providing a dual effect, but this aspect may be set to dampen going forward. With last night’s FOMC minutes revealing a slight dovish tweak with regards to a symmetric inflation target (IE equally happy to be above 2% as below) there could be a pullback ahead in the buck and this would aide a recovery in cable.
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