Light Bid For GBP On Retail Sales, JPY On Defensive

Firmer than expected UK retail sales data helps the GBP to the top of the G10 FX table and caps the overnight uptick in the BBDXY, after the broader USD failed to test its Thursday highs In Asia-Pac hours.

• As noted elsewhere, we don't think this data really changes anything materially for the BoE. However, the move does show how sensitive the pound is, even to data that's not at the forefront of the MPC's minds. Cable looked above $1.2900, but the figure has since given way.
• UK political matters failed to meaningfully impact GBP, with a victory for each of the Conservative, Labour & Liberal Democrat parties noted in the by-elections that were conducted yesterday. The ruling Conservatives avoided the worst-case scenario, but the results underscore the headwinds that PM Sunak faces ahead of the next general election (which BBG sources have suggested could take place in November ’24).
• Elsewhere, JPY faded domestic CPI data-inspired gains, after the Y/Y metrics printed in line to a touch above expectations. The subsequent move leaves the JPY at the bottom of the G10 FX pile.
• The local docket is thin ahead of the weekend, with next week’s central bank decisions from the U.S., Eurozone & Japan well and truly in focus. Cross-market and headline flow will likely dominate through the remainder of Friday’s session.