1.2%: British Pound remains subdued after UK Retail Sales beat forecasts

The British Pound cut some daily losses against the US Dollar but remained negative following UK economic data.
UK Retail Sales rebounded sharply in May, jumping 1.2% MoM to beat forecasts and erase April's revised 1.0% drop.
Traders adopt caution as US-Iran talks collapse after US VP Vance cancels Swiss summit trip.

Akhtar Faruqui FXStreet

GBP/USD remains subdued for the third successive day, trading around 1.3190 during the early European hours on Friday. The British Pound (GBP) pares its daily losses against the US Dollar (USD) but remains in negative territory following the release of key economic data from the United Kingdom (UK).

The Office for National Statistics (ONS) released data on Friday, indicating that UK Retail Sales climbed 1.2% month-over-month (MoM) in May after falling by a revised 1.0% in April. The market forecast was for a rise of 0.5% in the reported month. The core Retail Sales rose by 1.2% MoM in May, compared with the previous decrease of 0.1% (revised from -0.4%) and the estimated 0.4% increase figure.

The annual Retail Sales in the UK came in at 3.2% in May versus 0.1% prior (revised from 0%) and 1.9% expectations. The annual core Retail Sales jumped 4.6% in the same month, against April’s 1.1%. The reading came in above the consensus of 3.3%.

The GBP/USD pair holds losses as the Greenback strengthens amid prevailing hawkish sentiment surrounding the Federal Reserve (Fed) policy outlook. The newly appointed Fed Chairman Kevin Warsh emphasized that "price stability" remains the central bank's ultimate guiding principle. Nearly half of the Federal Open Market Committee (FOMC) officials indicated that at least one more rate hike may be necessary later this year.

Moreover, market caution revived on Friday as US-Iran talks collapsed following a CNN report that US Vice President JD Vance canceled his planned trip to the Bürgenstock summit. A spokesperson for the Vice President noted that the logistics of these negotiations "have never been simple or predictable," adding that no departure is imminent until a concrete update is established.

Economic Indicator

Retail Sales (MoM)

The Retail Sales data, released by the Office for National Statistics on a monthly basis, measures the volume of sales of goods by retailers in Great Britain directly to end customers. Changes in Retail Sales are widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the MoM reading comparing sales volumes in the reference month with the previous month. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

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