GBP/USD recovers on dollar weakness after disappointing retail sales

FXstreet.com (London) - Sterling has rebounded against the dollar running into Janet Yellen’s testimony that has just begun in the Senate as part of her confirmation hearing to succeed Ben Bernanke as chairman of the Federal Reserve. Her dovish stance and underlining of continuing US labour market weakness has boosted hopes that the Fed will delay any tapering of its USD85bn-a-month asset purchase programme, putting pressure on the dollar

Sterling had seen some intraday falls as a result of disappointing retail sales figures. Retail sales volumes shrank 0.7 percent in October, with 1.8 percent growth on the year, according to data from the Office for National Statistics. Consensus expectations had been for flat growth on the month, and 3.1 percent growth on the year.

Though the drop was attributed to milder than usual weather delaying shoppers purchasing winter clothes, the drop is a reminder that declining real wages pose a threat to consumer confidence.

Though data earlier this week showed inflation fell to 2.2 percent in October, earnings were up just 0.7 percent in the three months to September.

GBP/USD is currently trading at USD1.6076, up 0.19 percent on the day after lows of USD1.5989.