GBP/USD holds near 1.35 as UK PMIs and retail sales loom

GBP/USD is trading near 1.35 ahead of key UK economic data, including manufacturing and services PMIs and retail sales figures, which could influence expectations for the Bank of England’s monetary policy trajectory. The pound’s near-term direction hinges on whether the data confirms resilience in the UK economy, supporting the case for higher-for-longer interest rates, or signals weakening demand that could prompt rate cut speculation. A stronger-than-expected print in retail sales or PMIs would likely bolster the GBP through improved yield differentials and domestic demand sentiment, while a miss could weigh on sterling and benefit the USD via safe-haven flows and relative yield shifts. Retail and consumer-facing sectors may also react to the retail sales data, with equity performance potentially tied to consumption trends. Traders will focus on the official PMI release at 08:30 GMT and retail sales at 07:00 GMT for immediate market-moving cues.

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