GBP/USD has been bearish on Friday, but the pound is trying to recover some losses. Currently, one British pound buys 1.3024 US dollars, down 0.16% as of 1:05 AM UTC. The pair touched a daily low at 1.3002. Despite the loss, the pound is the winner this week, as it has rallied until yesterday.
USD slows down due to weak consumer spending
The sterling started to recover some of today’s losses after data published by the US Commerce Department showed that consumer spending has slowed for another month in January, with sales at clothing stores noting the biggest decline since 2009. The US retail sales index excluding automobiles, building materials, gasoline, and food services (core retail sales) was flat last month, while the December reading was revised down to show a 0.2% rise instead of the previously reported increase of 0.5%. Economists surveyed by Reuters anticipated the core retail sales figure to grow by 0.3% in January.
The flat reading demonstrates that consumer spending continued to slow after losing momentum in the last quarter of 2019.
Nevertheless, overall retail sales showed a positive dynamic last month, increasing by 0.3%, though December data was also revised down.
Auto sales bounced back to show a 0.2% growth after tumbling 1.7% in December. Electronics and appliance sales fell by 0.5%.
Sales at building material stores surged 2.1%, the most since August last year, after increasing by 1.3% in December.
Separately, the US Labor Department said that import prices were flat last month, as the decline in petroleum costs offset gains in the prices of capital goods and motor vehicles. In December import prices rose 0.2%.
While the mixed economic data put pressure on the greenback, the British pound has been weakening on the political conflict in the UK, as finance minister Sajid Javid quit his role after a face-to-face row with Prime Minister Boris Johnson. Investors are worrying that the changes in the ministry will slow the Brexit implementation process, whose timeline is already tight. Javid resigned after Johnson required him to fire all five of his top aides in an attempt to merge his unit with Johnson’s office.