GBP/USD: Pound Climbs As May Set To Meet Merkel & Macron

The pound recovered from early losses on Wednesday. After dipping below US$1.30 in early trade in the previous session the pound rose to close just above break even at US$1.3025. GBP/USD is holding steady in early trade on Thursday.

U.K. inflation increased by a less than expected 1.3% year on year in December. This was softer than the 1.5% increase in consumer prices that city analysts had been expecting. The weaker inflation reading comes just days after dismal U.K. GDP data. The UK economy contracted -0.3% in November much worse that the stagnation in October as the U.K. economy struggles amid Brexit uncertainty and a slowing global economy.

Weak inflation and lacklustre growth mean the Bank of England is more likely to adopt a more dovish stance. In a speech on Wednesday Michael Saunders was clear when he said that it would be appropriate to maintain an expansionary policy stance and possibly cut rates further. , Michael Saunders added to dovish rhetoric from Carney, Vileghe and Tenreyo earlier in the month. If UK data fails to improve between now and the end of the month the BoE are likely to cut rates. The pound fell on the prospect of lower interest rates.

Today investors will look towards the BoE’s bank liabilities and credit survey for further clues over the health of the UK economy.

Will US Retail Sales Lift Dollar?

The US dollar dipped lower as the US ad China signed the first phase trade. Despite the two sides signing the historic deal, the US announced that it will not cut tariffs on Chinese imports until after the US presidential elections. This is so that the White House can observe compliance to the agreement. Sentiment improved when US Treasury Secretary Steve Mnuchin said that China had agreed to put together very significant laws to follow through on its phase one commitments. He aso confirmed that there will be additional tariff roll backs in phase two. The safe haven dollar eased lower.

Today investors will look towards US retail sales. Analysts are expecting sales to increase 0.3% month on month in December, up from 0.2% the previous month. A strong reading could help lift the dollar.


What do these figures mean?
When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.

For example, it could be written:

1 GBP = 1.28934 USD

Here, £1 is equivalent to approximately $1.29. This specifically measures the pound’s worth against the dollar. If the US dollar amount increases in this pairing, it’s positive for the pound.

Or, if you were looking at it the other way around:

1 USD = 0.77786 GBP

In this example, $1 is equivalent to approximately £0.78. This measures the US dollar’s worth versus the British pound. If the sterling number gets larger, it’s good news for the dollar. is a news site only and not a currency trading platform. is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.