The British pound has recorded slight gains in the Thursday session. Currently, GDP/USD is trading at 1.3726, up 0.29% on the day. On the fundamental front, UK Retail Sales will be released on Friday (7:00 GMT), with a forecast of 2.2%. This follows a slide of -8.2% in the previous reading.
Pound stems slide
Sterling is up slightly on Wednesday, after sustaining five successive losing days. GBP closed on Wednesday below the 1.37 line, the first time that has occurred since early February. The pound hasn’t suffered a losing month since September 2020, but unless the currency has a strong rebound next week, it looks like the pound will lose ground in March.
The upswing in US treasury bills has boosted the dollar, but soft UK data has contributed to the pound’s woes. Unemployment claims in February shot up to 86.6 thousand, much higher than the street consensus of 9.0 thousand. This was followed by a slowdown in inflation in February, with headline CPI falling from 0.7% to o.4%, missing the forecast of 0.8%. As well, Core CPI fell from 1.4% to 0.9%, marking just the second time since 2015 that Core CPI has fallen below the 1.0% level.
The Federal Reserve has constantly told the market that it has no plans to raise rates or even taper its stimulus, with the US economy still in need of help in the wake of the severe economic downturn due to Covid-19. This made a comment by Fed Chair Powell earlier in the day in an NPR interview all the more surprising. Powell said that he was generally satisfied with the Fed’s response to Covid, and that as the economy made substantial further progress, the Fed would “gradually roll back” on its asset purchases. If the Fed does have plans to taper in the near future, this could signal a rate hike is in the works, which would be bullish for the US dollar.
GBP/USD Technical Analysis
- 1.3699 remains under pressure in support earlier. Below, there is support at 1.3590
- 1.3974 is the next resistance line
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