The GBP/USD pair is currently trading in positive territory, hovering around 1.3660, marking its highest level since September 17, 2025, during the early European session on Monday. The Pound Sterling rises against the Greenback following stronger-than-anticipated UK Retail Sales and Purchasing Managers Index data. Traders are poised to monitor the US November Durable Goods Orders report set to be released later on Monday. GBP/USD gains momentum, reaching its highest level since mid-September, approximately 1.3660 during Monday’s early European session. The positive UK Retail Sales and business activity figures bolster the Pound Sterling. Markets largely anticipate that the Fed will maintain current rates at the forthcoming meeting, attributed to a stabilizing labor market.
Data released on Friday indicated that UK Retail Sales increased by 0.4% month-over-month in December, following a decline of 0.1% in November. This figure exceeded expectations, surpassing the forecast of a 0.1% decline for the reported month. In December, the core Retail Sales, excluding auto motor fuel sales, saw an increase of 0.3% month-over-month, rebounding from a prior decline of 0.4% (revised from -0.2%). This figure surpassed the market consensus, which anticipated a 0.2% decrease. The UK S&P Global UK Composite PMI rose to 53.9 in December, exceeding expectations and reaching a 21-month high.
Some analysts have predicted a potential delay in further Bank of England rate cuts as a result of these reports, which could strengthen the GBP against the US Dollar. The UK central bank is anticipated to maintain its current rates during its upcoming meeting in February. According to reports, markets fully anticipate a quarter-point rate cut by June.
The US Federal Reserve is set to announce its latest interest rate decision on Wednesday, with expectations that rates will remain unchanged within the 3.50% to 3.75% target range. Traders will pay close attention to Fed Chair Jerome Powell’s remarks following the policy meeting, as his insights could offer significant clues for the months ahead. Any hawkish comments from Fed officials could bolster the USD and serve as a challenge for the major pair in the near term.