US GDP Ticks Higher, British Pound eyes UK Retail Sales

The British pound is higher on Thursday. In the European session, GBP/USD is trading at 1.2924, up 0.50% on the day.

The UK releases the February retail sales report on Friday, with the markets bracing for a decline of 0.3% m/m. Retail sales soared 1.7% in January, crushing expectations and hitting the highest level since May 2024. Annualized, retail sales are expected to ease to 0.5%, down from 1% in January.

The Confederation of British Industry (CBI) reported a sharp drop in sales volumes in March, as the retail sales index fell to -41, down from -23 in February. This was the lowest reading since July 2024.

The CBI reported that retailers blamed the soft report on global trade tensions and the autumn budget have dampened consumer and business confidence, leading to reduced demand.

Businesses will see an increase in employers' taxes next month, which could lead to significant job losses, which in turn will hurt consumer spending.

The UK will also release final GDP data for the fourth quarter. The initial estimate showed that the economy expanded 0.1% after no growth in Q3. Annualized, the initial estimate came in at 1.4%, up from 1.0% in Q3. The final estimates are expected to confirm the initial readings, which would indicate that the UK economy continues to struggle.

US GDP ticks higher to 2.4%

In the US, Final GDP (3rd estimate) for the fourth quarter came in at 2.4% y/y, slightly higher than the 2.3% gain in the previous two estimates. This was down sharply from the 3.1% in Q3. The Federal Reserve is carefully monitoring the economy's slow decline and has signaled it will lower rates twice during the year.

GBP/USD Technical

• GBP/USD is testing resistance at 1.2940, followed by resistance at 1.2991
• 1.2864 and 1.2813 are the next support levels