GBP/USD clings to gains near 1.3280 region, moves little post-UK retail sales data
|- Renewed USD selling bias assisted GBP/USD to regain traction on Friday.
- Bulls seemed rather unaffected by persistent Brexit-related uncertainties.
- Better-than-expected UK retail sales data did little to provide any impetus.
The GBP/USD pair held on to its modest intraday gains near the 1.3275-80 region and had a rather muted reaction to the latest UK macro data.
The pair managed to regain some positive traction on the last day of the week and built on the previous day's goodish bounce of around 65 pips from sub-1.3200 level. The uptick was sponsored by the emergence of some fresh selling around the US dollar following the US Treasury Secretary Steven Mnuchin's decision to end pandemic relief funding for struggling businesses.
This comes on the back of worries about the economic fallout from the imposition of new COVID-19 restrictions in several US states and further fueled speculations for additional monetary easing by the Fed. The expectations were evident from the ongoing slide in the US Treasury bond yields, which undermined the USD through the first half of the trading action on Friday.
On the other hand, the British pound seemed rather unaffected by reports that the European Union leaders on Thursday demanded the EU to publish its no-deal Brexit plans. Also, the lack of progress on key sticking points – the so-called level playing field, fishing rights and state-aid rules – and stalled in-person Brexit talks did little to prompt any selling around the GBP/USD pair.
On the economic data front, the UK monthly retail sales recorded a growth of 1.2% MoM in October as against consensus estimates pointing to a flat reading. Meanwhile, the core retail sales (stripping the auto motor fuel sales) also came in better-than-expected and stood at 1.3% MoM, which remained supportive of the intraday uptick for the GBP/USD pair.
It, however, remains to be seen if bulls can capitalize on the move or the GBP/USD pair struggles to move back above the 1.3300 mark as investors await Brexit-related updates. This makes it prudent to wait for some strong follow-through buying before traders start positioning for any further near-term appreciating move, possibly towards mid-1.3300s.
Technical levels to watch
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