Sterling holds steady after rallying on upbeat economic data
Sterling steadies after rallying on upbeat UK data; consolidation seen ahead of key CBI retail sales figures on Monday.
The pound held steady against the US dollar today after surging higher yesterday on the back of upbeat UK economic data. Sterling is taking a breather but remains supported by strong private sector activity figures for November.
The GBP/USD exchange rate is currently trading around the 1.2550 level, showing little change from the opening level this morning. The minor currency pair rallied over 1% yesterday to hit session highs above 1.2580.
The gains came after better-than-expected flash Purchasing Managers’ Index (PMI) data for the UK, which showed the dominant service sector returned to growth last month. This led investors to scale back expectations for imminent interest rate cuts from the Bank of England (BoE).
Remarks from BoE Chief Economist Huw Pill today, stating the central bank cannot “declare victory” on inflation, failed to make an impact. With limited data on today’s calendar, sterling looks set to consolidate.
Attention for the pound now turns to Monday’s Confederation of British Industry (CBI) distributive trades survey, which could pressure the currency if retail sales have deteriorated.
Meanwhile, the US dollar is muted ahead of US flash PMI data this afternoon, which is expected to confirm slowing activity. With the US on a shortened session after Thanksgiving, trading volumes look set to thin out. This may limit larger swings in GBP/USD during the day.
