The GBP/USD has dropped to a daily low after falling below 1.3500. This decline is due to strong US economic data, which reinforces the Federal Reserve’s current monetary policy. Additionally, weak retail sales in the UK put further pressure on the pair, leading it to trade at 1.3434, a decrease of 0.52%. Pound Sterling is weak compared to major currencies as UK retail sales and PMI show only slight improvements. The Office for National Statistics has reported that retail sales growth for June was slower than expected.

Declining GBP/USD Pair

The GBP/USD pair is continuing to fall, reaching around 1.3490 during Asian trading hours. This drop is driven by rising demand for the US Dollar. Investors are taking a cautious stance as they await the tariff deadline from US President Donald Trump and an upcoming policy meeting from the Federal Reserve. It’s important to exercise caution when considering the mentioned assets. There are no guarantees of error-free information. Conduct thorough personal research, as trading forex carries high risk, which may lead to loss of all or part of your investment. Seeking advice from an independent financial advisor can help clarify the risks related to forex trading. We believe that derivative traders should prepare for ongoing weakness in the sterling-dollar exchange rate. Recent US inflation data moderated to 3.3% in May but remains well above the central bank’s target, supporting the Fed’s firm policy stance. This suggests that the dollar will continue to strengthen against other currencies.

UK Economic Concerns

Concerns about the British economy are valid, as retail sales figures have declined since initial reports. New data from the national statistics office shows a significant 2.3% drop in May sales volumes, far below expectations. This indicates that UK consumers are struggling, which could lead the Bank of England to consider lowering interest rates sooner than the US does. As a result, strategies that profit from declines, such as buying put options on the currency pair, may be beneficial. This approach allows traders to take advantage of the downtrend while limiting their maximum risk to the premium paid. Historical data from the 2022 UK “mini-budget” crisis, when the pair approached parity, illustrates how quickly sentiment can cause serious weakness. Traders should remain cautious, especially with potential political changes in the United States. The possibility of trade policy shifts during a second term for Mr. Trump introduces considerable uncertainty and could increase demand for safe-haven assets like the dollar. We advise traders to account for increased volatility around major political events and policy announcements. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now