GBP weekly forecast

The Pound started the week strong against its rivals, despite mixed remarks from Bank of England Deputy Governor Ben Broadbent.

Broadbent remarked that an interest rate cut in the summer was possible but also indicated that policymakers were cautious about reducing rates too quickly.

On Wednesday, the UK's latest consumer price index surpassed expectations, boosting the GBP.

In April, both headline and core inflation eased less than expected, with headline inflation dropping from 3.2% to 2.3%, exceeding the forecast of 2.1%. This bolstered the Pound as markets reduced their bets on a Bank of England rate cut in June.

Thursday, however saw Sterling sentiment was dampened by the latest PMI data, showing a larger-than-expected contraction in the UK's services sector. However, the British manufacturing index unexpectedly returned to growth in May, which helped mitigate the Pound's losses.

Sterling ended the week on a weak note as the latest UK retail sales figures revealed a underwhelming reading for April. Domestic retail sales plunged by 2.3%, significantly below the expected 0.4% reading, slightly lowering GBP.

Looking ahead for the Pound, a notable absence of UK data next week is expected to result in GBP trading without a clear direction, likely influenced by broader risk dynamics. If markets lean towards riskier assets, the Pound might strengthen. However, if markets adopt a more cautious approach to trading, Sterling sentiment could be dampened.

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