The British Pound (GBP) edged higher against the US Dollar (USD) in Asian trading on Friday, with the GBP/USD pair rising approximately 0.25% to trade near 1.3450. The advance was supported by stronger-than-expected UK consumer sentiment data and broad-based US Dollar weakness fueled by fiscal concerns in the United States.
The Pound Sterling found early support after the UK’s GfK Consumer Confidence Index rose by 3 points to -20 in May, beating market expectations of -22 and improving from April’s -23 reading. While still deeply negative and below its historical average, the improvement hints at a modest rebound in consumer morale.
Investors are now focused on upcoming UK Retail Sales data, with expectations pointing to a third consecutive monthly decline in April. A weak reading could temper optimism and weigh on the Pound’s momentum.
Mixed UK Data Keeps GBP in Check
The Pound’s gains were slightly tempered on Thursday after disappointing manufacturing figures. The UK Manufacturing Purchasing Managers’ Index (PMI) fell unexpectedly to 45.1 in May from 45.4 in April, below the forecasted 46.0, signaling continued contraction in the sector. In contrast, the Services PMI improved to 50.2 from 49.0, marginally above expectations and signaling a return to expansion.
US Dollar Under Pressure on Fiscal Jitters
The US Dollar came under pressure as Treasury yields declined, with the 30-year bond yield falling from 5.15%—its highest level in 19 months—amid mounting concerns over the US fiscal outlook. The pullback in yields weighed on the Greenback and provided a tailwind for the GBP/USD pair.
Contributing to investor anxiety, the US House of Representatives narrowly approved former President Donald Trump’s expansive “One Big Beautiful Bill” by a single vote on Thursday. The legislation, which includes tax cuts for tipped wages and loans for US-made vehicles, is projected by the Congressional Budget Office (CBO) to widen the deficit by $3.8 billion. The bill now awaits consideration in the Senate.
Related Topics:
