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GBP/USD firms as USD softens despite mixed UK data

Brown Brothers Harriman says GBP/USD is supported by UK services momentum in the August PMI, even as retail sales fell 0.5% month over month in July.

Reported · Written up by our desk · Major Pairs

GBP/USD is edging higher as the broader US dollar weakens, according to Brown Brothers Harriman’s Elias Haddad, even though recent UK economic releases were mixed.

Haddad pointed to a decline in UK retail sales in July, with total retail sales volumes down 0.5% month over month, partly reversing earlier gains, and a steeper drop in retail sales excluding automotive fuel.

At the same time, the August PMI data came in stronger, lifting the composite PMI to a four month high of 52.5, where services activity improved enough to offset slower manufacturing production growth.

BBH also said market pricing of 50 bps Bank of England rate hikes over the next 12 months looks too aggressive in light of the UK’s negative output gap, but the growth inflation mix still provides support for sterling.

Latest closeGBP/USD 1.354 ▲0.3%

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