Sterling Near $1.32 Amid 1.2% Retail Surge

Sterling near $1.32 as UK retail sales beat forecasts

At 08:10 ET (12:10 GMT) GBP/USD was 0.22 % higher at 1.3234, keeping the pound just above the $1.32 level and on track for a weekly decline of more than 1 %. The euro was up 0.10 % against the dollar at 1.1467.

UK retail sales volumes for May rose 1.2 % month‑on‑month, more than double the 0.5 % consensus, and annual sales climbed 3.2 % versus the 1.9 % expected. Over the three months to May, sales were up 0.4 % compared with the three months to February, driven by non‑food stores, department stores that benefited from favourable weather, and computer and telecom retailers extending a growth run that began with product launches in March. The May increase followed a 1 % decline in April, which was revised up from an initially reported 1.3 % fall, and a March rise that was revised higher to 0.7 % from 0.6 %. Retailers attributed the May pickup to promotional activity and hot weather.

Politically, Greater Manchester Mayor Andy Burnham won the Makerfield by‑election with 54.8 % of the vote, beating the Reform UK candidate’s 34.5 % and positioning himself as a potential challenger to Prime Minister Keir Starmer. Burnham described the result as a “turning point” for Labour, and Culture Minister Lisa Nandy said she expected the two men to speak soon. Around a quarter of Labour MPs have called for Starmer’s resignation since the party’s heavy losses in last month’s local elections, with the defence and health ministers among senior figures reportedly set to resign.

Fiscal data showed public borrowing of £23.3 billion in May, £5.6 billion above the Office for Budget Responsibility’s forecast of £17.7 billion and 30.4 % higher than a year earlier. Borrowing for the financial year to date reached £46.3 billion, £7.7 billion above forecast. Central‑government debt interest payable jumped to £11.7 billion, the highest for any May on record, as inflation‑linked gilts added £4.9 billion in capital uplift. Public‑sector net debt was provisionally estimated at 95.1 % of GDP, a level not seen since the early 1960s.