British Pound Bounces, But Still Struggling to Sustain Gains
The British pound strengthened against every major currency with the exception of the Japanese Yen.
There was no economic data released from the UK and perhaps the lack of it is exactly what is helping the currency recover. Tomorrow however, the currency will be in play with retail sales due for release. The deterioration in the BRC retail sales monitor suggests that spending could slow, but the rise in average earnings including bonuses means that any slowdown may not be material. For traders who believe that the British pound has reached a bottom and will continue higher, the better bets may continue to be pairs like GBP/AUD and GBP/CAD because the one thing that has not stopped is carry trade liquidation. Having already sold off significantly, the British pound could outperform the Australian and Canadian dollars.