- Pound (GBP) as retail sales jump 13.9% mom in June vs 8% expected
- Consumer confidence remains depressed as government prepares to transition out of job retention scheme
- US Dollar (USD) broadly out of favour after US labour market recovery shows signs of stalling
- US PMI’s could help restore the mood
The Pound US Dollar (GBP/USD) exchange rate is holding steady, pausing for breath after rallying across most of the week. The pair settled higher for the fourth straight day on Thursday +0.06% at US$1.2742. At 06:15 UTC, GBP/USD trades flat at US$1.2742, picking up off session lows.
UK retail sales soared in June as lockdown measures continued to ease and non essential shops reopened. Retail sales jumped 13.9% month on month, adding to May’s 12% surge. The data boosted hopes of a V-shared recovery. However, concerns linger than retail sales figures could quickly decline as government support to the labour market comes to an end.
British consumer confidence remained weak in July ahead of the government easing back on the furlough scheme which has supported 9 million employees during the coronavirus crisis. As the government withdraws its support many people fear they will lose their job, dragging on confidence.
Confidence is important because it measures consumers’ willingness to spend on large items.
Attention will now turn to the UK service sector and manufacturing sector PMI readings which are expected to show that he UK economy continues to rebound.
The US Dollar remains depressed versus its major peers as the US struggles to contain the spread of coronavirus. Investors are shunning the greenback amid concerns over its economic recovery and as a new stimulus package continues to be debated on Capitol Hill.
Weekly initial jobless claims in the US increased for the first time since March in a sign that the labour market’s recovery is stalling. The number of people filing for unemployment benefits increased by 1.4 million last week, compared to 1.3 million a week earlier as parts of California and the sunbelt went back into lockdown.
Meanwhile Republicans and Democrats continue debating a new fiscal stimulus package to boost the US economy.
Looking ahead investors will focus on US service sector and manufacturing sector PMI readings which could restore the upbeat mood. Analysts are expecting both sectors to have expanded in July