Pound slips as weak retail data fuels BoE rate cut
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Daily Currency Update
The pound edged lower today, extending its retreat from recent two-week highs against the US dollar, as market focus shifts from inflation to mounting concerns over UK growth.June retail sales data disappointed, rebounding just 0.9% following a sharper-than-expected downward revision to May’s 2.8% drop. Core sales, which excludes autos and fuel, rose only 0.6%, well below forecasts of a 1.2% increase. While warmer weather supported food sales, the overall sluggish recovery underscores growing doubts about the UK’s economic momentum.
Coupled with weaker-than-expected PMI readings earlier in the week, the latest figures have reinforced market expectations that the Bank of England may pivot towards growth support. Rate cut expectations have firmed, with markets now pricing in a 25 basis point cut as early as August, and a second move likely before year-end.
Key Movers
The US dollar edged higher on Friday but remained on course for its largest weekly decline in a month, as caution over looming US tariff negotiations and central bank meetings kept FX markets on edge.With the August 1 tariff deadline approaching, uncertainty around trade policy has weighed on the dollar, limiting its recovery from recent two-week lows. Investors are also looking ahead to next week’s policy meeting from the Federal Reserve. While no rate changes are expected, markets will be closely parsing forward guidance for clues on the timing of future moves.
Expected Ranges
- GBP/USD: 1.3405 - 1.3495 ▼
- GBP/EUR: 1.1425 - 1.1485 ▼
- GBP/AUD: 2.0425 - 2.0525 ▼
- EUR/USD: 1.1715 - 1.1795 ▲