GBP/USD recovers few pips from sub-1.1200 levels, still down nearly 1% for the day
|- A combination of factors prompts aggressive selling around GBP/USD on Friday.
- The UK political development weighs on sterling amid resurgent USD demand.
- The mixed US Retail Sales report does little to provide any meaningful impetus.
The GBP/USD pair come under aggressive selling pressure on Friday and snaps a two-day winning streak to a one-week high touched the previous day. The intraday downfall is sponsored by a combination of factors, though spot prices show some resilience below the 1.1200 round-figure mark.
The British pound is pressured by the latest UK political developments, wherein reports confirmed that finance minister Kwasi Kwarteng has been sacked, making him the shortest-serving chancellor since 1970. This comes amid the emergence of aggressive US dollar buying, which, in turn, is seen exerting downward pressure on the GBP/USD pair.
The stronger US consumer inflation figures released on Thursday reaffirmed market expectations that the Fed will continue to tighten its monetary policy at a faster pace. In fact, the fed fund futures indicate a greater chance of another supersized 75 bps rate hike at the next FOMC meeting in November, which is seen underpinning the greenback.
The USD sticks to its strong intraday gains and seems unaffected by mixed US monthly Retail Sales data. The US Census Bureau reported that the headline sales were flat MoM in September, missing estimates, while sales excluding autos unexpectedly climbed by 0.1%. Furthermore, the previous month's readings were also revised slightly higher.
That said, retreating US Treasury bond yields, along with signs of stability in the equity markets, hold back the USD bulls from placing aggressive bets. This, in turn, offers some support to the GBP/USD pair, at least for the time being. Traders now look to the Prelim Michigan US Consumer Sentiment and Inflation Expectations Index for a fresh impetus.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.