Pound Holds Firm as UK GDP and Retail Beat
The UK economy showed unexpected strength this morning, with Q4 GDP holding steady at 0.1% and February retail sales jumping 1.0%, beating expectations of a decline. These figures suggest underlying resilience in consumer spending and economic growth, supporting the British pound ahead of a crucial U.S. inflation update later today. Markets are now focused on the Core PCE Price Index for February, the Federal Reserve’s preferred inflation measure, due at 12:30 GMT.
Key Data Out Today – Friday, March 28
- UK GDP (Q4): Both the quarterly and yearly prints matched expectations, coming in at 0.1% QoQ and 1.5% YoY, showing modest but steady growth as the UK economy dodges recession for now.
- UK Retail Sales (February): A positive surprise here, rising 1.0% MoM (vs. -0.3% expected), signaling consumer resilience and possibly cooling talk of early BoE rate cuts.
- U.S. Core PCE Price Index (February): Due at 12:30 GMT, the market is looking for 0.3% MoM and 2.7% YoY. A print above expectations could revive hawkish bets, while a softer reading may support risk assets into the weekend.
Commodities
- Oil: Brent is at $74.00 and WTI at $69.88, both little changed on the day. Weekly gains of over 2% reflect ongoing geopolitical risk and tighter U.S. supply. But on a yearly basis, oil remains well in the red (Brent -14.9%, WTI -15.9%).
- Gold & Silver: Gold is on fire, now trading at $3,071.40 (+0.52%) — up over 17% YTD and nearly 37% YoY, with investor demand surging on inflation uncertainty and central bank buying. Silver also continues its strong run, now at $34.44 (+0.05%).
Currency Movements
- GBP/USD is stable at 1.2946 (-0.02%), holding gains after upbeat UK retail and GDP data. The pound remains supported by cooling inflation and stronger growth momentum.
- EUR/USD dipped to 1.0778 (-0.22%) as traders eye U.S. inflation prints and ECB speakers from earlier in the week signal a cautious approach.
- AUD/USD is slightly lower at 0.6299 (-0.07%) and NZD/USD also softened to 0.5721 (-0.32%) — both under mild pressure amid global growth uncertainty.
- USD/JPY pulled back to 150.51 (-0.36%), as the yen finds support despite BoJ staying dovish. U.S. yields have been rangebound, providing little direction.
- USD/CNY edged up to 7.2717 (+0.05%). The yuan is stuck in a narrow band, with markets watching Chinese policy steps to support growth.
- USD/CHF is at 0.8820 (+0.04%) with the franc showing little movement. No major catalyst from Swiss data recently.
- USD/CAD firmed to 1.4321 (+0.11%), slightly outpacing oil’s flat move. The loonie is under pressure despite commodity strength.
- USD/MXN is flat at 20.30, holding recent highs after strong gains in Q1. Peso strength continues to draw attention amid high carry.
- USD/INR fell to 85.35 (-0.37%), as the rupee strengthened further on positive flows and stable macro outlook.
Market Outlook
Markets are rangebound ahead of the February Core PCE report, with risk sentiment cautious but steady. If today’s inflation data comes in cooler than expected, expect equities and risk FX to bounce, while yields and the dollar soften. A hotter print, however, could reverse this week’s modest risk rally and reinforce higher-for-longer rate expectations.
Commodity traders will be watching for confirmation of continued inflation pressures, while gold bulls remain firmly in control. The pound may continue to outperform if UK data keeps surprising to the upside, while the dollar’s next move hinges on this afternoon’s release.