GBP up against USD as retail sales boomed in October and investors expect a rate hike in December

Last week, GBP suffered a straight week of loss after the Bank of England confounded market expectations by keeping its benchmark rate on hold. Ahead of the meeting on Nov.4, economists and traders had expected the BoE to raise rates for the first time in three years. BoE’s decision not to raise the rate in November has prompted more investors to believe that a rate hike of potentially 15 basis points will come in December.

The macroeconomic environment is also supporting GBP. The British Retail Consortium announced that retail spending rose by 1.3% compared with October 2020, recovering some momentum after growth slowed to just 0.6% in September. Last week, BoE predicted that consumer prices would hit almost 5% by April next year. GBPUSD is currently trading at 1.3579, up about 0.12%.