Created
: 2025.09.05
2025.09.05 20:27
Pound Sterling (GBP) is clawing back losses after stronger-than-expected July retail sales, but upside remains limited. With services CPI stuck at 5.0% y/y and growth prospects muted, the Bank of England has little scope to ease aggressively, leaving GBP vulnerable to renewed weakness, particularly versus Euro (EUR), BBH FX analysts report.
"GBP/USD continues to recover from Tuesday's slump triggered by the brief sell-off in long term gilt. UK retail sales growth overshot expectations in July. Total retail sales volumes rose 0.6% m/m (consensus: 0.2%) vs. 0.3% in June (revised down from 0.9% due correction to the retail sales back data). Excluding auto fuel, retail sales volumes increased 0.5% m/m (consensus: 0.3%) vs. 0.6% in June driven by non-store retailers and clothing stores sales."
"Going forward, elevated household savings means spending activity will likely remain subdued. Unfortunately, the BOE has limited room to dial-up easing to support growth because UK services CPI inflation is stubbornly high at 5.0% y/y. Bottom line: elevated UK underlying inflation and a sluggish growth outlook spell trouble for GBP, especially versus EUR."
Created
: 2025.09.05
Last updated
: 2025.09.05
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