The British pound started the day with gains but has reversed directions. In European trade, GBP/USD is trading at 1.4192, up 0.01%% on the day. Earlier in the day, the pound touched a high of 1.4234, its highest level since February 22.
UK data sparkles
The week wrapped up on a very positive note in the UK, with a surge in Retail Sales and strong PMI reports. Retail Sales jumped 9.2% in April, up from 5.4% beforehand and crushing the estimate of 4.5%. The surge was a result of the further reopening of the UK economy, particularly the opening of all non-essential retail businesses from April 12. Consumers were only too happy to take advantage of the easing of health restrictions and make purchases after months of lockdown.
The April PMI reports showed continued strong growth in the manufacturing and services sectors. Manufacturing PMI accelerated to 66.1, up from 60.7, which was also the consensus. Services PMI improved to 61.8, up from 60.1 beforehand. This figure was slightly short of the forecast of 62.2. The neutral 50-level separates contraction from expansion, so both manufacturing and services are well into expansionary territory.
Friday’s retail sales and PMIs, which follow stronger employment and inflation data, are further signals that the UK economic recovery is gaining traction.
Over in the US, investors remain focused on inflation. On Thursday, the Philly Fed Manufacturing Index fell to 30.1, down sharply from 50.1 beforehand. Next up is Manufacturing PMI, which will be released later on Friday (13:45 GMT). The PMI is expected to show a strong read of 60.0, but if it underperforms, investors could get nervous at a second soft manufacturing release in just two days, and this could sour sentiment towards the US dollar.
GBP/USD Technical Analysis
- GBP/USD continues to test resistance at 1.4180, as this line has been relevant for much of the week. Above, there is resistance at 1.4262
- There are support lines at 1.4003 and 1.3908
For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/
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