Buying dollars with pounds has gotten more expensive this morning, with the rate dropping over 1% through the course of early morning trading. Retail sales data released from the UK yesterday evening has shown the cost of living squeeze hit the economy, with non-essential spending drastically reducing. Online purchasing reduced and fuel sales fell too throughout March, as consumers cut down on travel where possible to avoid the high price of petrol and diesel at the pumps. Coming in well below analyst expectations, the mixture of the poor reading and a more bearish tone to risk in the wider global economy has pushed GBP/USD below the 1.30 mark and now into the 1.2880 territory at the time of writing. From a technical perspective, analysts are suggesting 1.2830 is where the pair will find the next level.
Fed chair Jerome Powell provided more downside pressure yesterday, saying there was the possibility of a 50-point interest rate hike by The Fed in the next meeting at the beginning of May. With the Bank of England being less forthcoming on the potential to hike rates further, it makes for a bleak picture for the UK currency.
Against the euro the pound has also lost ground with the rate sitting closer to the 1.19 level than this time yesterday. The European Central Bank have also been rumoured to be looking into interest rate hikes imminently, which leaves the pound searching for a sense of direction.
Have a great day.
Author: Jack Nicholls, Senior Relationship Manager.
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