The Pound is rising. Overview for 23.05.2022

GBPUSD is keeping its positive momentum and trying to get back to balance.

The Pound sterling is moving away from its local lows against the USD. The current quote for the instrument is 1.2552.

The statistics published last Friday showed that the Retail Sales in the United Kingdom gained 1.4% m/m in April after losing 1.2% m/m in March and against the expected decline of 0.3% m/m. The Core Retail Sales also added 1.4% m/m after losing 0.9% m/m the month before. On YoY, the Retail Sales dropped 4.9% against the expected decline of 7.2%; the Core Retail Sales lost 6.1% against the expected reading of -8.4%.

It’s interesting that the food products sales in supermarkets didn’t change much, unlike excise goods, such as alcohol and tobacco. The demand for fuel has recovered – it showed +1.4% after -4.2% in March. 

The data turned out to be better than expected – it supported the Pound.

According to the chief economist of the Bank of England Huw Pill, the British regulator will have to go a long way in tightening its monetary policy. He believes that the regulator has a lot of tough decisions to make in the future to make inflation get back to 2%. In Pill’s opinion, tightening the regulator’s monetary policy will continue, while the CPI might reach double digits. 

Among other things, Pill said that the monetary committee didn’t have any decisions on selling bonds. However, such a strategy can already be seen in financial asset prices, for example, the bond yield parameters. In his opinion, selling bonds has great potential when it comes to the monetary policy and tightening and might be slowed down at any moment. 

The GBP is now recovering backed up by statistics and not so tough external background. However, risks remain the same – the “greenback” rally that may resume any moment, and unsettled Brexit issues.