GBP/USD Drops to 1.2350 Amid Fed Concerns and Downbeat United Kingdom Retail Sales

  • GBP-USD revives intraday low as it snaps a 3-day uptrend following the key United Kingdom data.
  • British Retail Sales dipped to -1.0% month-on-month in December against the expected 0.5% and prior -0.4%.
  • Hawkish Fed enables the USD to pare the latest losses regardless of downbeat U.S. data.
  • Positive remarks from Bailey of BoE, JPMorgan’s positive stance for the United Kingdom economy influenced the Cable price.

GBP-USD drags to new intraday lows of around 1.2350 as the United Kingdom Retail Sales dissatisfied markets early on Friday. However, beware that the latest hawkish remarks from BoE (Bank of England) Governor Andrew Bailey, plus JPMorgan’s optimistic predictions put a floor under GBP-USD.

U.K.’s December Retail Sales confirmed a 1.0% month-on-month contraction against the market’s 0.5% expected growth and the previous readings of -0.4%. Considering the United Kingdom’s massive share in Britain’s GDP (Gross Domestic Product), the GBP-USD fell after the crucial data.

On Thursday, Andrew Bailey of the Bank of England stated that the December inflation decline marked the first signal or a turn of events. The policymaker added that a recession could be impending, though it (recession) may be shallow, according to historical standards.

Elsewhere, JPMorgan presented an upbeat bias for the United Kingdom’s Q2 2023 interest rate – from prior estimates of 4.25% to 4.5%. Furthermore, the investment bank forecasts the UK FY23 GDP growth will improve from the previous forecast of -0.3% to -0.1%.

Beware that the debates of the U.K. cutting fuel duty and anticipations of an end of tax relief to Britain’s moneybags in the coming budget appear to probe GBPUSD traders.

Meanwhile, the US DXY (Dollar Index) consolidates the past day’s losses – the highest in more than a week. That comes as Federal policymakers predict higher interest rates during the final presences before the fifteen-day mute phase ahead of the FOMC (Federal Open Market Committee) meeting in February.

Meanwhile, mixed United States stats probe the GBP-USD bears. In that context, the U.S. Unemployment Claims declined to the lowest since last April last year, whereas the Philadelphia Federal Manufacturing Survey Index improved.

Nonetheless, U.S. Housing and Building mimicked the previously downbeat United States Retail Sales & PPI (Producer Price Index) to trigger recession fears in the globe’s leading economy, earlier supported by U.S. activity data and softer wage growth.

These plays find the key United States Treasury bond yields struggling to stretch the past day’s bounce back from its multi-day low, whereas the S&P 500 Futures display mild gains. Meanwhile, the latest data shows Asia-Pacific stocks trading mixed. Consequently, the GBP-USD may stay sidelined even as bearishness has emerged of late.

Technical Analysis

GBP-USD retreats from its down-sloping resistance from May last year, near 1.2400 during this publication. However, the currency’s successful trading above the 2-week-old ascending support, near 1.2314, gives buyers hope.

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