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GBP/USD holds steady post-volatile session on UK data, US inflation signals

  • GBP/USD trades steady around 1.3325 after a volatile session driven by UK and US data releases.
  • Strong UK retail sales and PMI figures reinforce the view of a resilient UK economy.
  • Softer US inflation data boosts expectations of Federal Reserve rate cuts.

GBP/USD trades sideways around 1.3325 on Friday at the time of writing, unchanged on the day after a volatile session triggered by multiple economic releases from the United Kingdom (UK) and the United States (US).

In the UK, the latest macroeconomic data confirmed stronger-than-expected growth momentum. Retail Sales rose by 0.5% MoM in September, defying expectations of a 0.2% decline, while August’s figure was revised upward to 0.6%. The rebound, supported by robust online jewelry demand, suggests that Gross Domestic Product (GDP) growth in Q3 may exceed the Bank of England’s (BoE) projection of 0.3%.

The S&P Global flash Purchasing Managers Index (PMI) data for October also supported this narrative. The Composite PMI improved to 51.1 from 50.1 in September. The Services PMI rose to 51.1, while the Manufacturing PMI climbed to 49.6, its highest level in a year, signaling that the industrial downturn is easing.

Despite these encouraging signs, the Pound Sterling (GBP) struggles to build upward momentum. Investors still expect the Bank of England to cut its interest rate by 50 basis points (bps) within a year, but chances for a move at the November meeting remain low, according to BBH FX analysts. "The swaps market price in roughly 25% odds of a 25bps cut to 3.75% at the next BoE policy on November 6. Over the next 12 months, the swaps market implies 50bps of easing and the policy rate to bottom at 3.50%”, note the analysts.

In the US, the Federal Reserve (Fed) is also expected to move toward monetary easing next week and in December. Fed rate-cut expectations were further supported by US inflation data, which came in softer than forecasts. The Consumer Price Index (CPI) rose 0.3% MoM in September, with the annual rate at 3%, while the core measure slowed to 3% YoY. 

Later in the day, stronger-than-expected US S&P Global PMI data showed private sector activity expanding solidly, with the Composite PMI rising to 54.8. The resilience of US business activity helped the US Dollar (USD) recover from earlier losses, leaving GBP/USD virtually unchanged for the day at the time of writing.

Pound Sterling Price Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Canadian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.06%0.13%0.14%0.28%0.16%0.13%0.06%
EUR0.06%0.20%0.21%0.35%0.21%0.19%0.12%
GBP-0.13%-0.20%0.00%0.14%0.02%-0.01%-0.07%
JPY-0.14%-0.21%0.00%0.15%0.02%-0.01%-0.07%
CAD-0.28%-0.35%-0.14%-0.15%-0.13%-0.16%-0.23%
AUD-0.16%-0.21%-0.02%-0.02%0.13%-0.02%-0.10%
NZD-0.13%-0.19%0.01%0.01%0.16%0.02%-0.07%
CHF-0.06%-0.12%0.07%0.07%0.23%0.10%0.07%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Author

Ghiles Guezout

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

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