GBP/USD erased its earlier losses on Friday but only after falling to a one-month lows of 1.3602 after below-forecast UK retail sales nL8N2PR0ZO adding to recent skepticism over the pound.
The losses extended sterling's drive further into negative territory versus the USD year-to-date, as recent data misses indicate H1 2021 ebullience for a UK recovery may have been premature.
Despite Friday's UK retail sales miss, short-sterling futures continue to price a 25bp BoE rate hike between March and June 2022, though the strip begins to flatten after December 2023, in contrast to U.S. Eurodollars indicating a initial 25bp Fed hike between September and December 2022 and a steeper rise thereafter.
UK short-sterling futures are pricing a 70bp rate rise from September 2021 until Dec 2025, while U.S. Eurodollar futures indicate a 137bp rise over the same period.
Should UK data continue to underwhelm, the pound is likely to move lower.
GBP/USD support at 1.3805's lower 30-week Bolli is holding for now, as shorts lighten positions into the weekend, with 55-DMA support at 1.3582 and July 20's 1.3573 low in focus.
Should The Fed be perceived as hawkish at Jackson Hole next week, further weakness toward Jan 11's 2021 low at 1.3451 low is likely.
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