The British Pound reacted positively to the UK’s GDP figures released earlier today.
The economy grew by 0.6% in the second quarter, following a 0.7% rise in Q1, in line with market expectations.
This helped the pound recover from yesterday’s reaction to inflation data, which showed a slight increase to 2.2% in July, although it was slightly below the forecast of 2.3%.
The BoE anticipates a continued decline in inflation and could continue to shift towards a less restrictive policy stance which could limit the pound’s upside potential. Yields ticked up as well but could remain under pressure as monetary policy could continue to soften.
The market is now focused on today’s upcoming U.S. retail sales data, which is anticipated to rise by 0.3% in July. If it strengthens, consumer spending could lead to an increase in U.S. Treasury yields and support the dollar, potentially putting pressure on the pound-dollar pair. On the other hand, strong UK retail sales could support the pound.
