GBP/USD runs into resistance near the Monday high @ 1.3441
And that is helping to put a cap on price action after the positive beats in retail sales figures earlier.
So, what's next for the pair?
A breach of the 1.3441 level will be a good platform for buyers to make a run towards last week's high @ 1.3472 so that will be the next key level in terms of an upside move for the pair. But for the time being, I don't see how the retail sales data changes the overall outlook all too much.
Make no doubt, positive data is positive data. You can't argue with that.
But this only helps to put a stop to the Q1 soft patch argument and show an improvement in Q2. The real question will be how much will this play a part in the BOE's rate hike plans?
The answer to that is 'very little'. Real wages are still weak - although improving bit by bit - and that means that household consumption/spending is still a major problem that has yet to be tackled.
The boost in May is a welcome sign, but the fact that inflation is closer to the 2% level now than the 3% level - and wages trending down again - means the BOE has to still remain cautious in its approach to another rate hike.
And that to me, is still what is driving sterling right now. Couple that with Brexit risks and the fact that we're set for negotiations with the EU to get kicked down the road to October, the outlook is still more cloudy than it is clear.
