GBP/USD rebounds above 1.3450 toward 39-month highs, UK Retail Sales eyed

GBP/USD reached back to near 1.3468, the highest since February 2022, marked on Wednesday.
Friday’s UK Retail Sales may decline for the third consecutive month in April.
US 30-year bond yield retreated after hitting 5.15% on Thursday, the highest in 19 months.

Akhtar Faruqui FXStreet

GBP/USD posts gains of about a quarter of a percent in the Asian hours on Friday, trading around 1.3450 at the time of writing. The pair edges higher as the Pound Sterling (GBP) attracts buyers after the GfK better-than-expected Consumer Confidence Index for the United Kingdom (UK) was released. Traders await UK Retail Sales, scheduled to be released later in the day, expecting a monthly decline for the third consecutive period in April.

On Friday, the UK Consumer Confidence Index rose by 3 points to -20 in May, better than the expected reading of -22 and reversing from April’s -23 reading. However, consumer sentiment remains cautious as the index remains well below its long-term average.

However, the British Pound dipped slightly as data showed on Thursday that the seasonally adjusted UK Manufacturing Purchasing Managers’ Index unexpectedly fell to 45.1 in May from 45.4 in April, as the market forecast was a 46.0 reading in the reported period. Meanwhile, the Preliminary UK Services Business Activity Index rose to 50.2 in May against the previous 49.0 reading and the expected 50.0 figure.

The GBP/USD advanced as the Greenback stepped down, driven by a decline in US Treasury yields. The 30-year US bond yield pulled back from 5.15%, the highest in 19 months, due to growing concerns regarding the increase in the fiscal deficit in the United States (US), while Trump's “One Big Beautiful Bill” is on its way to the Senate floor.

The US House of Representatives approved Trump’s budget by one vote on Thursday, which would deliver tax breaks on tip income and US-manufactured car loans. The proposal is expected to increase the deficit by $3.8 billion, according to the Congressional Budget Office (CBO).

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.

GBP/USD hits multi-week tops around 1.3560

GBP/USD gathers fresh steam and advances to new three-month peaks near the 1.3560 zone on Friday. Cable’s sharp move higher comes after three daily drops in a row and follows the increasing selling pressure hurting the Greenback.

EUR/USD pops to fresh two-month highs, targets 1.1600

EUR/USD advances markedly, revisiting the upper 1.1500s for the first time since mid-June. The pair’s sharp uptick comes on the back of a strong retracement in the US Dollar amid BoJ intervention chatter and despite steady uncertainty in the Middle East.

Gold picks up pace, approaches $4,400

Gold rebounds toward the $4,400 mark per troy ounce on Friday, reversing the previous day’s pullback. The precious metal’s recovery comes as fresh and intense weakness keep weighing on the US Dollar, while traders keep assessing easing expectations of an imminent Fed interest rate hike and the situation from the Middle East.

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Weekly focus: Some relief in US inflation concerns

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