Pound Stumbles Despite Retail Surge as US Sentiment Retreats, Trade Talks Falter

The Pound Sterling struggled to find its footing against a resilient US Dollar, dipping 0.20% to trade at 1.3311, despite a surprisingly strong UK Retail Sales report. The robust data failed to bolster GBP/USD, which held above the critical 1.3300 level but couldn’t shake off broader market pressures. Meanwhile, US Consumer Sentiment plummeted to its lowest level since the late 1970s, dropping from 57 to 52.2, while inflation expectations soared to multi-year highs, with one-year forecasts jumping from 5% to 6.5% and five-year outlooks rising from 4.1% to 4.4%. These developments, coupled with mixed signals on US-China trade, kept markets on edge.

Trade policy uncertainty continued to dominate investor focus, with reports suggesting China might consider tariff exemptions on certain US goods as costs mount. This news briefly lifted risk sentiment, but the optimism quickly faded as no concrete progress emerged. The ongoing tariff saga, driven by US trade policies, overshadowed economic data, though the sharp decline in US consumer confidence and the UK’s upbeat retail figures prevented GBP/USD from slipping below 1.33. Markets remain caught in a tug-of-war between trade speculation and diverging economic indicators across the Atlantic.

The Pound’s inability to capitalize on positive retail data underscores the US Dollar’s dominance amid heightened inflation fears and trade uncertainty. As investors grapple with deteriorating US sentiment and the prospect of prolonged tariff disputes, GBP/USD’s resilience above 1.3300 offers a sliver of stability. However, with inflation expectations surging and trade talks faltering, the path ahead remains fraught with volatility, leaving the Pound vulnerable to further shifts in global risk appetite.