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Sep 17 - 11:55 AM

GBP/USD - COMMENT-US U.Mich, UK Retail Sales Add To Sterling Woes

By Paul Spirgel  —  Sep 17 - 10:40 AM

Sterling fell on Friday, falling to session lows after strong U.S. University of Michigan consumer and one-year inflation expectations nL1N2QJ18C after initially being weakened by disappointing UK retail sales data nL8N2QJ0RS.

Sterling losses were cushioned somewhat during U.S. morning trade by profit-taking on recent GBP/USD shorts ahead of upcoming Fed and BoE meetings.

The recent resurgence in U.S. data and below-forecast UK retail sales data may temper recent hawkishness by the BoE Governor Andrew Bailey nS8N2OX08U and others, potentially pushing UK rate hike expectations further out the curve 0#FSS: and narrowing the gap with the U.S. outlook.

Sterling has been probing trendline support off of August and September lows below 1.38 for the last two days.
A close below trendline support at 1.3794 would give further momentum to bears, opening the way for a run toward September 8's low of 1.3727 and lower 30-d Bolli support by 1.3663.

Should Fed and BoE rate hike expectations converge further, GBP/USD's near 1% gain in 2021 would likely evaporate as traders target the Jan.
11 2021 low at 1.3451.

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GBP Chart: Click here

Refinitiv IFR Research/Market Commentary


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