Dollar Turns Higher after Retail Sales Rise and as Fed Rate Cut Forecasts Land on Scrapheap

The Dollar turned higher in the noon session Thursday after U.S. retail sales figures surpassed market expectations for the month of December, reversing earlier losses and challenging the widely-held belief that the economy slowed in the final quarter. 

The Pound was under the cosh again Wednesday as the probability of an imminent Bank of England (BoE) rate cut rose further and technical analysts are warning of downside risks to the British currency but the afternoon's eagerly-anticipated signing of the U.S.-China trade deal is a wild card for Sterling. 

The Dollar ceded ground to Pound Sterling while paring gains over the Euro Tuesday after December's inflation figures surprised on the downside, although losses are likely to be limited because price pressures are thought to be sufficient to prevent the Federal Reserve (Fed) from cutting interest rates again. 

The Pound is already plumbing the bottom of the major currency barrel for 2020 but it has further to fall against the Dollar in the weeks ahead, according to multiple analysts, who all say the British currency is unprepare for an interest rate cut that could come as soon as the end of this month. 

The Pound made good time out of the starting block last week but was lower against the mighty Dollar by the close on Friday, although it's now near to a key support level on the charts and will driven mostly in the coming days by economic data from both sides of the Atlantic. 

The Dollar was 'left in the lurch' on Friday by December jobs figures that missed analyst expectations, prompting questions about the outlook for the U.S. economy and taking some of the shine off what is still the joint-highest yielding major currency. 

The Pound underperformed most major rivals in the noon session Thursday after Bank of England (BoE) Mark Carney shocked markets by telling a conference in London the BoE is still contemplating cutting interest rates, although BMO Capital Markets says the resulting falls are a buying opportunity.