GBP/USD on the backfoot below 1.3100 ahead of UK Retail Sales
|- GBP/USD snaps three-day winning streak on Friday.
- Brexit challenges, USD recovery seem to disappoint the cable buyers.
- Traders await monthly UK Retail Sales data for fresh impulse.
GBP/USD fails to hold onto three-day-old recovery gains while trading around 1.3070 ahead of the London open on Friday. The US dollar’s (USD) broad recovery and the European Union’s (EU) tough stand on Brexit seems to have pushed the bulls back off-late. Market players will now concentrate on the UK’s December month Retail Sales as an immediate catalyst.
The European Union (EU) Trade Commissioner Phil Hogan was the latest to join the chorus of the regional diplomats who crosses the UK PM Boris Johnson’s Brexit optimism. Further, echoes of the EU policymakers’ demands to safeguard the regional locales living in the UK after the departure confronted the same for the British expats by the Tories. Though, the German minister struck a conciliatory tone while saying that the UK must get post-Brexit ' defense privileges'.
On the other hand, the USD benefited from the upbeat data as well as the Trump administration’s ability to strike the key trade deals with China, Mexico and Canada.
Risk tone remained mostly sluggish despite China’s upbeat Industrial Production and Retail Sales beating the forecast to the upside. With this, the US 10-year treasury yields gained one basis point to 1.82% by the press time.
Looking forward, the UK’s December month Retail Sales will be followed closely after the latest disappointment from inflation data increased the odds of the BOE’s rate cut. Forecasts suggest an increase of 2.6% versus 1.0% in the YoY figure whereas the monthly growth might have reversed -0.6% prior growth to 0.7%. Following that, the US numbers concerning the housing, consumer sentiment and industrial production will be noted down for additional direction.
Technical Analysis
Unless providing a daily closing beyond the monthly resistance line, at 1.3080 now, the pair is less likely to visit the year-start top nearing 1.3280.
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