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GBP/USD edges higher as mixed US data weighs on US Dollar

  • GBP/USD rises above 1.1350 as the US Dollar weakens after mixed economic data.
  • US Retail Sales YoY eased to 3.9%, down from 4.4% previously, suggesting a moderation in household spending activity.
  • Consumer Expectations Index rose slightly to 57.2, beating forecasts of 56.5.

The British Pound (GBP) gains traction against the US Dollar (USD) on Friday as the Greenback came under pressure following mixed US economic data, with GBP/USD paring most of Thursday’s losses. At the time of writing, the pair is trading near 1.1356 during the American trading hours.

The latest US data released earlier on Friday offered little clarity on the economic outlook. Retail Sales rose 0.5% in July, matching expectations, but marked a slowdown from the 0.9% gain in June. On a yearly basis, Retail Sales rose 3.9%, slowing from 4.4% previously, while the Retail Sales Control Group — a key component feeding into GDP — climbed 0.5%, missing estimates of 0.8%.

Meanwhile, Industrial Production contracted by 0.1% in July, missing expectations for a flat reading and marking a notable pullback from June’s 0.4% increase. The decline reflects a slowdown in factory output and utility production, reinforcing concerns that underlying momentum in the industrial sector may be weakening.

The Empire State Manufacturing Index surprised to the high side, jumping to 11.9 in August from 5.5 previously, but the report did little to lift the US Dollar, which remains under pressure.

Adding to the cautious mood, preliminary data from the University of Michigan showed a weaker read on consumer confidence. The Consumer Sentiment Index fell to 58.6 in August, sharply missing expectations of 62.0 and down from 61.7 in July. Meanwhile, the Consumer Expectations Index edged up slightly to 57.2, beating the 56.5 forecast but still lower than the prior 57.7 print. The soft headline reading added to concerns about the resilience of consumer demand.

The US Dollar Index (DXY), which tracks the value of the Greenback against six major currencies, is trading near two-week lows around 97.80, as markets digest the data with a cautious tone. A slight pullback in Federal Reserve (Fed) rate cut expectations may limit further downside in the Greenback, though traders still assign high odds to a policy move next month. According to the CME FedWatch Tool, markets are now pricing in a 92% probability of a 25 basis point rate cut at the Federal Reserve’s September meeting, down from fully pricing it in earlier this week following the softer Consumer Price Index (CPI) print.

Author

Vishal Chaturvedi

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.

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