GBP/USD gathered bullish momentum and advanced toward 1.2250 during the European trading hours on Tuesday. The positive shift witnessed in risk sentiment makes it difficult for the US Dollar to preserve its strength, helping the pair stretch higher.
The British Retail Consortium (BRC) Like-For-Like Retail Sales jumped 4.1% YoY in November versus 1.2% prior. Even so, Reuters said, “British consumer spending ticked up last month at a rate that greatly lagged behind inflation, according to surveys on Tuesday that underscored the pressure on household budgets ahead of the Christmas holidays.”
Final readings of the UK’s November month S&P Global/CIPS Composite PMI eased to 48.2 versus 48.3 initial forecasts whereas the S&P Global/CIPS Services PMI confirmed the 48.8 flash estimates.
Against this backdrop, S&P 500 Futures print mild gains despite Wall Street’s downbeat close whereas the US 10-year Treasury bond yields retreat to 3.57% after rising eight basis points (bps) the previous day.
To sum up, mixed sentiment in the market and an absence of major data, as well as optimism surrounding China and the pre-Fed blackout, allowed GBP/USD to stay firmer. However, the bulls may have limited upside room as the Bank of England (BOE) hawks seem less convincing and the chatters surrounding the UK’s economic transition turn grim as of late.
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