Pound Suffers Despite Strong UK Data
The British Pound has been trading near three-week lows against the US Dollar on Friday, hovering around 1.3300 and poised for a 1% weekly decline.
Despite an unexpected increase in UK Retail Sales data, which beat market consensus with a 1% rise in June, the Pound remains depressed. The data also showed a year-over-year increase of 4.2%, almost twice the 2.3% increment forecasted by market experts.
The US Dollar's strength has been fueled by risk-averse markets and increasing fiscal concerns in the UK, as well as reports of attacks on Saudi vessels in the Red Sea, which have pushed Brent Oil to levels near $100.
Analysts at ING argue that the recent bout of Pound strength is unlikely to prove durable, citing weaknesses in UK fundamentals. They warn that 'Sterling's rally has been driven more by positioning, carry and potentially some M&A flows than by a lasting improvement in UK fundamentals.'