Sterling rises on weaker Dollar and retail sales data

24 Jun 2022

The Pound rose against the Dollar on Friday, on track for its first weekly rise in four weeks, on better-than-forecast retail data from the UK and a weaker Dollar.

Retail sales declined in May by 0.5% on the month, under the 0.7% fall predicted by economists surveyed by Reuters.

In early Friday training, Sterling rose 0.25% against the greenback at $1.2294, and was flat against the Euro at 85.84 pence. The currency wasn’t impacted too much from reports the Conservative party lost two parliamentary seats on Friday, fuelling doubts about Prime Minister Boris Johnson’s future.

"The politics is mostly for domestic consumption, we know in theory there can’t be a leadership challenge for the next 12 months, unless they change the rules," said Kenneth Broux, Societe Generale FX strategist.

Furthermore, the fall in retail sales followed the PMI statistics for June published on Thursday, which revealed a composite reading of 53.1, exceeding the average forecast of 52.6.

Broux added a series of downbeat news was already "baked in" to the Pound, which in the main was responding to Dollar weakness fuelled by “traders scaling back where U.S. interest rates may peak,” Reuters reports.

Sterling has edged up 0.7% on the week to the Dollar.

Trader focus will now be on comments from the Chief Economist at the Bank of England, Huw Pill who is making a speech on Friday, along with Monetary Policy Committee member, Jonathan Haskel.

"It's an extremely difficult balancing act, they have to try to not create a deep downturn while getting inflation under control, that’s going to be very difficult," Broux added.