The British pound traded higher against its major counterparts in the European session on Friday despite data out of the UK showing that retail sales unexpectedly fell in November.
The Office for National Statistics (ONS) reported that retail sales, a key measure of consumer spending, surprisingly fell by 0.1% month-on-month, when they were expected to expand by 0.4%. However, the pace of decline was much lower compared to the 0.9% contraction seen in October, which was revised down from 1.1%. On an annual basis, the measure of consumer spending grew steadily at 0.6%, slower than expectations of 0.9%.
Demand for motor fuel and lower sales revenues at non-retail stores resulted in lower retail sales; However, the data showed that demand for household goods, clothing stores, shoes and textiles remained strong.
A continued decline in UK retail sales may raise concerns about the UK economy, which is already weak due to weak employment trends and external risks.
Going forward, the next major catalyst for the British pound will be the Bank of England (BoE) monetary policy outlook.
The British currency rose sharply on Thursday after the Bank of England cut interest rates by 25 basis points to 3.75% with a hawkish vote, as expected. However, the upward move was short-lived as the Bank of England maintained its stance on a “gradual downward” monetary policy path and said it remained confident that “inflation will be close to 2%” in the second quarter of 2026.
The price of the British pound today
The table below shows the percentage change of the British Pound (GBP) against the major currencies listed today. The British pound was the strongest against the Japanese yen.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | 0.06% | 0.01% | 0.88% | 0.10% | 0.07% | 0.41% | 0.11% | |
| euro | -0.06% | -0.05% | 0.88% | 0.04% | 0.00% | 0.35% | 0.05% | |
| GBP | -0.01% | 0.05% | 0.95% | 0.10% | 0.05% | 0.40% | 0.10% | |
| JPY | -0.88% | -0.88% | -0.95% | -0.81% | -0.86% | -0.53% | -0.81% | |
| Canadian | -0.10% | -0.04% | -0.10% | 0.81% | -0.04% | 0.29% | 0.01% | |
| Australian dollar | -0.07% | 0.00% | -0.05% | 0.86% | 0.04% | 0.35% | 0.05% | |
| New Zealand dollar | -0.41% | -0.35% | -0.40% | 0.53% | -0.29% | -0.35% | -0.29% | |
| Swiss franc | -0.11% | -0.05% | -0.10% | 0.81% | -0.01% | -0.05% | 0.29% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select the British pound from the left column and move along the horizontal line to the US dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Daily summary of market movement: The British pound stabilizes against the US dollar
- The British pound is trading quietly near 1.3380 against the US dollar during the European trading session on Friday. The GBP/USD pair stabilized despite surprisingly weak retail sales data in the UK and a stronger US dollar.
- At the time of writing, the US Dollar Index (DXY), which tracks the value of the dollar against six major currencies, is trading 0.25% higher near 98.65.
- The DXY index rises after regaining strength as traders remain confident that the Federal Reserve (Fed) will not cut interest rates at its January monetary policy meeting despite weak US Consumer Price Index (CPI) data for November. The US CPI report showed that headline inflation and core inflation slowed to 2.7% and 2.6% (on an annual basis) respectively.
- Initially, the US dollar reacted negatively to weak inflation data released on Thursday, but later recovered, as market experts believe the data is distorted by the government shutdown.
- According to the CME FedWatch tool, the probability of the Fed cutting interest rates by 25 basis points to 3.25%-3.50% at the January meeting rises marginally to 25.5% from 24.4% seen on Wednesday.
- Going forward, the main driver for the US dollar may be the White House’s announcement of the successor to Fed Chairman Jerome Powell. The latest reports show that the main contenders for the position of next Fed chairman are White House economic advisor Kevin Hassett, former Fed Chairman Kevin Warsh, and current Fed governors Christopher Waller and Michael Bowman.
Technical Analysis: The GBP/USD pair is fluctuating around the 1.3400 level
The GBP/USD pair fell to around 1.3377 on Friday. The 20-day Exponential Moving Average (EMA) is rising steadily, with the price holding above it and maintaining an upside structure. A pullback towards the average at 1.3320 is likely to attract offers.
The 14-day Relative Strength Index (RSI) has slowed at 59 (bullish-neutral) from its recent highs, yet momentum remains on the buyers’ side.
The upward slope of the 20-day EMA confirms the validity of the higher lows, while the recent lows have been contained. The pair could extend towards new highs if it manages to break above the two-month high at 1.3455. However, a daily close below the moving average (EMA) would open the way for a deeper correction towards the December 3 low at 1.3203.
(The technical analysis for this story was written with the help of an artificial intelligence tool.)
Bank of England FAQs
The Bank of England (BoE) decides monetary policy for the United Kingdom. Its primary goal is to achieve “price stability,” or a constant inflation rate of 2%. Its tool for achieving this is by adjusting base lending rates. The Bank of England sets the rate at which commercial banks lend and banks lend to each other, and sets the level of interest rates in the economy as a whole. This also affects the value of the British Pound (GBP).
When inflation is above the Bank of England’s target, it responds by raising interest rates, making it more expensive for people and businesses to obtain credit. This is positive for the pound because higher interest rates make the UK a more attractive place for global investors to put their money. When inflation falls below target, it is a sign that economic growth is slowing, and the Bank of England will consider lowering interest rates to reduce the cost of credit in the hope that companies will borrow to invest in growth-generating projects – which is negative for the pound.
In extreme cases, the Bank of England can enact a policy called quantitative easing (QE). Quantitative easing is the process by which the Bank of England dramatically increases the flow of credit into a stuck financial system. Quantitative easing is a policy of last resort when lowering interest rates does not achieve the necessary result. Quantitative easing involves the Bank of England printing money to buy assets – usually AAA-rated government or corporate bonds – from banks and other financial institutions. Quantitative easing usually leads to a weakening of the British pound.
Quantitative tightening (QT) is the opposite of quantitative easing, which is triggered when the economy strengthens and inflation begins to rise. During QE, the Bank of England purchases government and corporate bonds from financial institutions to encourage them to lend; In QT, the Bank of England stops buying any more bonds, and stops reinvesting the capital owed on bonds it already holds. This is usually positive for the British pound.
