Gbpusd drops amid UK retail growth and US inflation anticipation

GBPUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	-0.24%	-32 Pips
Week to-date	-2.37%	-317.4 Pips
October	-2.32%	-310.4 Pips

Upcoming key events (London Time)

Thu 01:30 PM USD CPI Inflation Rate (12-mth)
Fri 01:30 PM USD Producer Price Index (12-mth)

What happened lately

In the United Kingdom, retail sales showed a positive trend as the BRC Like-for-Like Retail Sales over the past 12 months increased to 1.7% in September, a noticeable rise from 0.8% in August. This improvement in retail sales indicates a strengthened consumer demand and a recovery in the retail sector. Such an increase can signal consumer confidence and could potentially contribute to economic growth in the UK. Economic data like this is often closely watched as it provides insights into the spending habits of consumers and general economic health.

In the United States, the market is anticipating high-impact economic data releases with the Consumer Price Index (CPI) inflation rate scheduled for release, followed by the Producer Price Index (PPI). The CPI is a key measure of inflation and an increase or decrease can have substantial implications for monetary policy. A higher-than-expected CPI could prompt the Federal Reserve to consider interest rate adjustments to curb inflation, which might influence investor sentiment and market movements. Similarly, the PPI provides insights into wholesale price changes and potential inflationary pressures from the production side.

Regarding the impact on GBPUSD, the recent drop of 0.24% to a rate of 1.30659 can be attributed to several factors, including market reactions to economic data and upcoming anticipation of US financial indicators. The improvement in UK retail sales might provide some support to the British Pound, but with significant US data releases like the CPI and PPI on the horizon, the focus might shift towards the US economy. Should the inflation measures indicate ongoing or accelerating inflation, the US Dollar could strengthen on speculation of more aggressive monetary tightening by the Federal Reserve. This could potentially lead to further depreciation of GBPUSD. Thus, currency traders and investors will be keenly observing the interplay of UK economic resilience and US inflationary pressures in shaping the currency pair’s trajectory.

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What can we expect from GBPUSD today?

GBPUSD on Wednesday dropped -0.24% to 1.30659. Price is below 9-Day EMA while Stochastic is falling in oversold zone.

Updated daily direction for GBPUSD looks bearish as the pair posted lower in Wednesday trading session.

Looking ahead for the day, immediate support level is at S1 1.30463 with break below could see further selling pressure towards S2 at 1.30266. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.31030 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.30550 would indicate selling pressure.

For the week to-date, take note that GBPUSD is bearish as the pair posted lower by -2.37%.

Key levels to watch out:

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