Pound muted as UK retail sales contract

The pound was subdued on Friday in response to weak economic data and fresh UK political uncertainty.

Sterling opens today’s session on positive footing, with GBP/EUR stable at €1.1644 and GBP/USD climbing to $1.2324. GBP/CAD is buoyed at C$1.5856, while GBP/AUD and GBP/NZD accelerate to AU$1.7747 and NZ$1.9501, respectively.

Looking ahead, will a slowing of US durable goods orders weigh on the US dollar at the start of this week’s session?

What’s been happening?

Barring a brief spike, the pound was mostly rangebound at the end of last week, following the publication of the UK’s latest retail sales figures.

Data published by the Office for National Statistics (ONS) confirmed sales growth contracted last month, in addition to sharply revising down sales in April. The lacklustre figures stoked concerns over the cost of living crisis and its impact on the UK economy.

Meanwhile Sterling was also suppressed by political uncertainty as a loss in two byelections on Thursday raised fresh questions over Boris Johnson’s future as Prime Minister.

The euro was also subdued on Friday in the wake of comments from European Central Bank (ECB) Vice President Luis de Guindos as he warned the Eurozone may experience negative growth in 2023.

However, the US dollar saw the most notable decline at the end of last week’s session, after the University of Michigan reported US consumer confidence plunged to a record low this month.

What’s coming up?

The publication of the latest US durable goods figures looks to be the only data of note at the start of this week.

Their release could see the US dollar face some headwinds later this afternoon as they are expected to report that goods order growth slowed last month.

In the absence of any notable EUR data releases movement in the euro today may be linked to tensions between the EU and Russia. If gas exports from Russia continue to drop, then European energy concerns could weaken the single currency.

With UK data also thin on the ground through the first part of the week, the pound may struggle to attract support. Particularly if this leaves GBP investors to focus on the UK’s economic woes and political uncertainty.