GBP/USD dips on strong US data, UK GDP next

The British pound is in negative territory today and has fallen below the 1.15 line. In the North American session, GBP/USD is trading at 1.1497, down 0.38%.

US retail sales, jobless claims beat forecast

US retail sales rose 0.3% MoM in August, rebounding from -0.4% in July. Excluding gasoline, retail sales were up 0.8%, as consumers responded to lower gas prices by increasing spending on other items. The data indicates that consumer spending is holding up, despite an inflation rate of 8.3%. There was more positive news as US initial job claims fell for a fifth consecutive week, falling to 213 thousand. This follows the previous release of 218 thousand and beat the consensus of 226 thousand.

These releases are especially significant, as the Federal Reserve relies on a strong labour market and solid consumer spending in order to remain aggressive with its hawkish policy as its grapples with high inflation. The Fed is expected increase rates by 75 basis points next week, with an outside chance of a massive 100bp hike. Inflation has proved to be more resilient than expected, and with the Fed continuing its steep rate-hike cycle, we may see more demand destruction which raises the likelihood of a recession.

The UK wraps up a busy week with retail sales on Friday. Consumers have been hammered by the cost-of-living crisis and predictably are cutting back on spending, which will only exacerbate the grim economic landscape. Retail sales fell by 3.0% YoY in July, and the markets are bracing for an even worse month of August, with an estimate of -3.4%. A release of -3.0% or worse could extend the British pound’s losses.

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GBP/USD Technical

  • GBP/USD is testing resistance at 1.1548. Next, there is resistance at 1.1689
  • There is support at 1.1417 and 1.1306

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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