British pound climbs, UK retail sales eyed

The British pound has rebounded on Thursday after two days of losses. In the North American session, GBP/USD is trading at 133.03, up 0.41% on the day.

UK retail sales will be released on Friday, with the markets bracing for a decline of 0.4% m/m for March. This follows a respectable 1% gain in February. Annualized, the market estimate stands at 1.8%, following a 2.2% gain in February.

Consumer confidence remains weak and the GfK consumer confidence index, which will be released on Friday, is expected to drop to -21 for April, down from -19 in March. Consumers are concerned about global trade tensions and the government's benefit cuts and spending reductions in the recent mini-budget.

The US tariffs are a major headache for the government and finance minister Rachel Reeves will meet on Friday with US Treasury Secretary Scott Bessent. Reeves is looking to make a deal with the US which would reduce the impact of the tariffs. Currently, the US has imposed 25% tariffs on vehicles, steels and aluminum. Reeves may offer to lower UK tariffs on US vehicles to 10% from 25% as part of an agreement.

UoM inflation expectations projected to hit 6.7%

US consumers are worried and expect inflation to go up, way up. UoM one-year inflation expectations jumped to 6.7% from 5% in the preliminary release and this figure is expected to be confirmed in the revised release on Friday.

This was the fifth straight acceleration and the highest level since Nov. 1981, which will raise concerns at the Federal Reserve about the upward risk of inflation. The Fed meets next on May 7 and is widely expected to hold interest rates.

• GBP/USD has pushed above resistance at 1.3276. Next, there is resistance at 1.3329
• 1.3212 and 1.3169 are providing support