• The Pound Sterling tumbles on increasing expectations that the BoE will opt for interest-rate cuts later this year.
• BoE Mann’s support for keeping interest rates unchanged in March boosted BoE rate cut prospects.
• UK Retail Sales data for February came in better than expected, although signaling little spending momentum among households.

The Pound Sterling (GBP) remains vulnerable against the US Dollar in Friday’s London session as the market sentiment is quite bearish. The GBP/USD pair fails to find support as increasing expectations that the Bank of England (BoE) will cut interest rates this year outweigh February Retail Sales data, which broadly beat market expectations. 

The United Kingdom Office for National Statistics (ONS) reported that monthly Retail Sales were unchanged after increasing by a significant 3.6% in January, a figure that was upwardly revised from 3.4%. Investors had anticipated sales to decline by 0.3%. On an annual basis, sales contracted by 0.5% against expectations of a 0.7% decline.

The Retail Sales data is an indicator of the current status of consumer spending, which accounts for a major part of the economy. Sales at Retail stores were slightly better than expected, but are insufficient to offset the risk-aversion theme in the global market.

A slower decline in Retail Sales seems insufficient to outweigh the impact of higher expectations for the Bank of England (BoE) to reduce interest rates from August. However, higher wage growth will continue to worry BoE policymakers as they work to bring inflation down to the 2% target.

Meta Title: Pound Sterling slumps on risk aversion mood, BoE rate cut bets escalate