|

GBP/USD drops after mixed UK retail sales, risk aversion

  • GBP/USD falls 0.48% to 1.2376, influenced by rising geopolitical risks and statements from major central banks.
  • Bank of England's Deputy Governor comments on inflation risks fail to support Sterling as it hits new lows.
  • Mixed economic data from the UK with stagnant retail sales in March, contrasting with modest annual growth.

The Pound Sterling tumbles against the US Dollar during the mid-North American session after a volatile trading day due to an escalation of the Israel-Iran conflict. Major central bank speakers led by the Bank of England (BoE) and the Federal Reserve (Fed), continued to set the tone for the financial markets. The GBP/USD trades at 1.2376, down 0.48%.

GBP/USD slides as Israel-Iran conflict escalates

According to Reuters, there were explosions over an Iranian city on Friday, in what sources described as an Israel attack. However, Iranian authorities downtoned the event and stated they had no plans for retaliation. As a consequence, the GBP/USD tumbled toward 1.2388, a new five-month low, before recovering some ground.

Words from the BoE’s Deputy Governor Dave Ramsden failed to underpin Cable, which refreshed five-month lows at 1.2372. Ramsden said he would consider the implications of Forex for inflation, adding that the bank would do what makes sense in terms of the BoE’s mandate. He added the disinflation process would be bumpy, but risks are tilted to the downside.

In addition, Chicago’s Fed President Austan Goolsbee adopted a neutral stance, slightly boosting the Greenback. He commented that progress on inflation has stalled, suggesting that a pause would allow incoming data to provide insight into the disinflation process.

British Retail Sales showed signs of stagnation during the European session in March compared to February’s reading. Analysts were expecting sales to grow 0.3% MoM, which came at 0%, while core sales tumbled from 0.3% to -0.3%. On an annual basis, the Office for National Statistics (ONS) revealed that sales rose by 0.8%, which is up from a drop of -0.3% in February.

GBP/USD Price Analysis: Technical outlook

After breaching below 1.2400, the GBP/USD could resume its ongoing downtrend. Unless buyers regain the 1.2400 mark, sellers are in charge. The first support would be the November 17 low of 1.2373, followed by the November 10 low of 1.2187. On the other hand, if buyers reclaim 1.24000, the next key resistance area would be the April 18 high at 1.2484, ahead of 1.2500.

GBP/USD

Overview
Today last price1.239
Today Daily Change-0.0047
Today Daily Change %-0.38
Today daily open1.2437
 
Trends
Daily SMA201.2573
Daily SMA501.2643
Daily SMA1001.266
Daily SMA2001.2573
 
Levels
Previous Daily High1.2485
Previous Daily Low1.2434
Previous Weekly High1.2709
Previous Weekly Low1.2427
Previous Monthly High1.2894
Previous Monthly Low1.2575
Daily Fibonacci 38.2%1.2453
Daily Fibonacci 61.8%1.2465
Daily Pivot Point S11.2419
Daily Pivot Point S21.24
Daily Pivot Point S31.2367
Daily Pivot Point R11.247
Daily Pivot Point R21.2503
Daily Pivot Point R31.2521

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

More from Christian Borjon Valencia
Share:

Editor's Picks

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.
 

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

RBNZ set to pause interest-rate easing cycle as new Governor Breman faces firm inflation

The Reserve Bank of New Zealand remains on track to maintain the Official Cash Rate at 2.25% after concluding its first monetary policy meeting of this year on Wednesday.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months. 

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.