Ella 
GBP/USD is hovering around 1.2720 on Wednesday in Asia. The U.S. dollar is facing downward pressure against the pound (GBP) as market expectations that the Federal Reserve may adopt easing policies continue to grow.
Falling U.S. bond yields have exacerbated market weakness and become one of the factors weakening the dollar’s strength. Two-year and 10-year Treasury yields are lower, at 4.29% and 3.88% respectively at the time of writing.
Former Dallas Fed President Robert Kaplan expressed his views to the media on Tuesday. Kaplan emphasized the Fed’s past mistakes in overly easing policy for long periods of time even when economic indicators were improving. Kaplan believes that the central bank must now be wary of repeating past mistakes and act cautiously to avoid excessive restrictions that hinder economic growth.
Sterling found support on Friday after UK retail sales data for November came in better than expected. Retail sales (monthly) rose 1.3%, beating estimates of 0.4% and bouncing back from October’s 0.0% stagnant indicator. Retail sales (year-over-year) beat market expectations, rising 0.1% versus expectations for a 1.3% decline. This marked an improvement in retail sales compared with the previous decline of 2.5%.
However, UK third-quarter GDP fell short of expectations. Annual GDP growth was just 0.3%, compared with forecasts of 0.6%. Gross domestic product came in at -0.1% quarter-on-quarter, compared with forecasts of a flat 0.0%.
On Thursday, the United States will release data on the number of Americans filing initial jobless claims last week and existing home sales. There is no important data to be released in the UK, with national housing prices being released on Friday, which will have a smaller impact.
