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GBP/USD extends losses around 1.2170, awaits UK CPI

  • GBP/USD extends losses after upbeat economic figures from the United States.
  • US Retail Sales surpassed expectations; Retail Sales Control Group recorded a notable increase.
  • UK CPI (YoY) is expected to decrease; monthly figures could report a notable increase.

GBP/USD extends losses on the second successive day, trading lower around 1.2160 during the Asian session on Wednesday. The upbeat economic data from the United States (US) exerts pressure on the pair.

The US Bureau of Economic Analysis (BEA) revealed that Retail Sales surpassed expectations of 0.3% MoM, rising to 0.7% in September. Additionally, the Retail Sales Control Group recorded a notable increase of 0.6%, compared to the previous hike of 0.2%.

This strong showing highlights the resilience of consumers. Following this, the Federal Reserve reported that Industrial Production demonstrated improvement by 0.3%, contrary to the expected stagnation at 0.0%.

The US Dollar Index (DXY) attempts to recover from the previous losses, trading higher near 106.28, by the press time. Additionally, US Treasury yields improved, with the 10-year US Treasury bond yield reaching 4.83%.

Richmond Fed President Thomas Barkin pointed out that the existing policy is already considered restrictive. Barkin expressed uncertainty regarding the approaching FOMC monetary policy meeting in November and emphasized that the US central bank cannot rely solely on longer-term higher bond yields to tighten monetary conditions.

The cautious sentiments expressed by numerous Federal Reserve (Fed) officials indicate a prudent approach by the central bank, underscoring a hesitancy to tighten monetary policy amidst the present economic landscape.

Moderate earnings data from the United Kingdom might have applied downward pressure on the Pound Sterling (GBP), contributing to the pressure on the GBP/USD pair.

The Average Earnings Excluding Bonus (3Mo/Yr) held steady at 7.8% in August, aligning with expectations. However, Pay levels Including Bonus for the same quarter decelerated to 8.1%, compared to the market consensus of 8.3%.

Investors await the UK Consumer Price Index (CPI) on Wednesday, with predictions pointing towards a slight decrease in the annual figure, shifting from 6.7% to 6.5%. The Core CPI is expected to be at 6%, down from September's 6.2%. Despite this moderation in the annual figures, there is an anticipation of a notable increase in the monthly CPI, rising from 0.3% to 0.4%.

An increase in the monthly inflation figures could stoke speculation for another interest rate hike by the Bank of England (BoE). Presently, interest rate probabilities for the BoE hover around a 50% chance of a 25 basis points hike in this cycle.

GBP/USD: important levels to watch

Overview
Today last price1.2172
Today Daily Change-0.0011
Today Daily Change %-0.09
Today daily open1.2183
 
Trends
Daily SMA201.2203
Daily SMA501.2442
Daily SMA1001.2596
Daily SMA2001.2444
 
Levels
Previous Daily High1.2217
Previous Daily Low1.2133
Previous Weekly High1.2337
Previous Weekly Low1.2123
Previous Monthly High1.2713
Previous Monthly Low1.2111
Daily Fibonacci 38.2%1.2165
Daily Fibonacci 61.8%1.2185
Daily Pivot Point S11.2138
Daily Pivot Point S21.2094
Daily Pivot Point S31.2054
Daily Pivot Point R11.2222
Daily Pivot Point R21.2262
Daily Pivot Point R31.2307

Author

Akhtar Faruqui

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

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