GBP/USD is trading in a tight range around 1.3375 after testing an intra-day high of 1.3446 yesterday. UK retail sales unexpectedly declined in November. Total retail sales volumes dropped -0.1% m/m (consensus: 0.3%) vs. -0.9% in October driven by reduced online demand for precious metals, BBH FX analysts report.
BOE signals gradual path for future easing
« Real household consumption growth has been stagnant in recent years. Consumption has risen by just under 1% since 2019 Q4. High interest rates have accounted for a large part of the weakness in consumption growth. As such, less restrictive BOE policy should lead to a pick-up in household spending in coming quarters. »
« Yesterday, the Bank of England (BOE) delivered on expectations and voted 5-4 in favor of a 25bps rate cut to 3.75%. Andrew Bailey, Sarah Breeden, Swati Dhingra, Dave Ramsden and Alan Taylor supported a cut. Megan Greene, Clare Lombardelli, Catherine Mann and Huw Pill supported a hold. »
« The BOE tweaked its easing bias to imply that additional cuts aren’t guaranteed. The BOE stressed again that the ‘Bank Rate is likely to continue on a gradual downward path’ but added ‘judgements around further policy easing will become a closer call’. We expect GBP/USD to hold above its 200-day moving average (1.3353). »