British Pound: Soft retail data and curve repricing risks – BBH

FXStreet Insights Team FXStreet

Brown Brothers Harriman’s (BBH) Elias Haddad observes GBP/USD trading directionless near its 200-day moving average around 1.3423, with downside risks from potential United Kingdom (UK) swaps curve repricing and a possible leftward shift under a Labour government. Weaker-than-expected April retail sales and an overly aggressive Bank of England (BoE) tightening path versus a projected negative output gap weigh on the Pound outlook.

Pound pressured by weak data and BoE pricing

"GBP/USD is directionless near its 200-day moving average at 1.3423. Scope for a downward adjustment to the UK swaps curve alongside the rising likelihood the Labour government pivots further leftwards can further undermine GBP."

"UK retail sales fell more than expected in April. Total retail sales volumes declined -1.3% m/m (consensus: -0.6%) vs. 0.6% in March (revised down from 0.7%) driven by fuel sales. Total retail sales, excluding automotive fuel, dropped -0.4% m/m (consensus: -0.3%) vs. 0.1% in March (revised down from 0.2%) dragged down by both clothing and non-store retailers."

"The swaps curve continues to imply a full 50bps of Bank of England (BoE) rate hikes to 4.25% in the next twelve months. That’s too aggressive given the BOE estimates a negative output gap between -1.5% and -1.7% GDP in 2026, and leading indicators point to a contraction in private sector activity over Q2."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD stays offered near 1.3370

GBP/USD remains on the back foot, slipping back toward the 1.3370 zone on Tuesday. Cable has come under pressure soon after testing the 1.3400 neighbourhood as investors turned more cautious in response to renewed effervescence on the geopolitical front.

EUR/USD stays offered below 1.1450

EUR/USD remains on the back foot ahead of the opening bell in Asia, returning to the low-1.1400s on the back of the resurgence of the demand for the US Dollar. Indeed, renewed jitters in the Middle East support the safe haven universe and weigh on the sentiment surrounding the risk complex. Moving forward, investors’ attention should shift to Wednesday’s FOMC Minutes.

Gold weakens toward $4,100

Gold adds to Monday’s decent pullback and trades close to the $4,100 mark per troy ounce on Tuesday. In the meantime, fresh geopolitical effervescence appear to have reignited inflation concerns, which in turn, limit any recovery attempt from the precious metal.

Ondo launches Perps with 20x leverage on tokenized stocks

Ondo Finance has expanded its financial services suite to include perpetual futures contracts for tokenized stocks. The platform, referred to as Ondo Perps, will provide 24/7 trading and over 20x leverage, utilizing tokenized stocks as collateral.

Bye, forward guidance: How to trade when central banks choose silence

Central banks have spent years telling markets what might come next. Now, traders face the possibility that they say a lot less. From the Federal Reserve to the European Central Bank and the Bank of England, policymakers are pushing back against forward guidance, arguing that the current world demands more flexibility.