Strong UK Data Continues
Near-Term BOE easing expectations continue to weaken in the face of further strong data out of the UK today. Following strong wage growth and higher CPI earlier in the week, the latest retail sales figures for January were seen rising to 1.7% from -0.6% prior, well above the 0.4% the market was looking for. The data marks the strongest uptick in spending since May last year with the increase predominantly driven by a sharp jump in food store sales. The category recorded a 5.6% gain, the biggest increase since May 2020, which tallies with the uptick in food costs we saw as part of the CPI data.
BOE Easing Expectations
On the back of better UK data this week, near-term BEO rate-cut bets have dwindled which has helped drive GBP higher. Given the weaker USD backdrop amidst ongoing tariff uncertainty, GBPUSD looks poise to continue higher for now. Looking ahead today, traders will be watching incoming UK and US PMI readings. Any further upside in UK data should help drive fresh GBPU buying ahead of the weekend, particularly if we see a positive surprises in the services reading which is expected unchanged at 50.8. Similarly, any downside in US readings will be a further boost for GBPUSD longs.
Technical Views
GBPUSD
The rally in GBPUSD is currently stalled into the 1.2685 level and the retest of the broken bull trend line. This is a key pivot for the market which bulls need to overcome to open the path to 1.3017 next. If we fail here, the downtrend could well resume on a break below support at 1.2482.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.