FX.co ★ Sterling Weakens Further after Retail Sales

The British pound decreased to $1.347, moving further away from its two-week peak of $1.358, as recent data from the UK shifted the focus from inflation concerns to those regarding economic growth. Retail sales in June only rebounded by 0.9%, following a significant 2.8% decline in May, which was subsequently revised downward. Core sales, excluding automobiles and fuel, rose just 0.6%, falling short of the anticipated 1.2% increase. Although warmer weather boosted food sales, the tepid recovery heightens concerns over the UK's economic momentum. Coupled with lackluster PMI figures, the data bolsters the expectation that the Bank of England will likely prioritize bolstering growth over controlling inflation. Markets are increasingly factoring in a 25 basis point rate cut in August, with an additional cut anticipated later in the year. Meanwhile, the US dollar appreciated as optimism for Federal Reserve rate cuts diminished, particularly after President Trump stated there is no need to dismiss Fed Chair Jerome Powell. In Europe, a more hawkish tone from the European Central Bank is prompting traders to curb expectations for further rate reductions this year.