Sterling Hemmed in by Weak UK Data!
The British pound (GBP/USD) edged above $1.34 at the end of the week, after a week dominated by UK economic data and uncertainty surrounding US-Iran negotiations. Markets await Bank of England policy direction amid a mixed economic picture.
April retail data showed a 1.3% decline, nearly double the 0.6% forecast, driven by a sharp drop in fuel sales. However, consumer confidence rose slightly in May, beating expectations.
The UK budget deficit widened to £24.3 billion in April, surpassing the £20.9 billion forecast and the largest April deficit since 2020. This report adds to market concerns about near-term fiscal stability.
April inflation data was lower than previously estimated, while the labor market showed an unexpected cooling. The May PMI also signaled a contraction in private sector activity, further complicating the outlook for monetary policy.
The market still anticipates two interest rate hikes from the Bank of England this year, but economic uncertainty is putting pressure on Sterling, keeping GBP/USD's movements likely limited.
In addition to domestic factors, US Senator Marco Rubio's comments regarding "positive signs" in the Iran talks also influenced sentiment. However, differences over Tehran's uranium stockpile and control of the Strait of Hormuz remain key obstacles, supporting the dollar's strength against Sterling. (asd)
Source: Newsmaker.id
