GBP/USD eases below 1.3800 amid steady USD, UK Retail Sales eyed
|- GBP/USD pares initial gains on Friday in the Asian trading hours.
- Higher US Treasury yields shield the underperformance of the US dollar.
- Mixed play of US debt deal, Brexit headlines ahead of critical UK/US data to set the tone for the day.
GBP/USD remains muted on the last trading day of the week. The pair remained pressured below 1.3830 as it failed to cross the level for the past few sessions.
At the time of writing, GBP/USD is trading at 1.3794, up 0.02% for the day.
The market seems to be fully discounting the Bank of England’s (BOE) rate hike expectations in November. Nick Bennenbroek, International Economist at Wells Fargo said after the initial November hike, there is an expectation for another 25bps increase in May 2022 and a further 25 bps in November 2022, which means ending the BOE’s policy rate cycle by the next year-end at 0.75%.
The Brexit-led optimism failed to uplift the sentiment surrounding the sterling, in the wake of the positive comments from UK Prime Minister Boris Johnson on the NI protocol.
The greenback managed to hold near 93.70 with minimum losses, tracing the higher US T-bonds yields at 1.68%. US President Joe Biden remained positive on the passage of the major infrastructure and social spending measures.
Mixed US data continues to weigh negatively on the US dollar. The Existing Home Sales jumped 6.29 million units in September with a growth of 7% on monthly basis. The Philadelphia Fed Manufacturing Index fell 23.8 in October as compared to 30.7 in September. The US Initial Jobless Claims came lower at 290K below the market expectations of 300K.
As for now, traders keep their focus on the UK Retail Sales and US Markit Manufacturing Purchasing Managers Index (PMI) data to gauge market sentiment.
GBP/USD technical levels
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