GBP/USD holds above the 1.2600 mark, UK Retail Sales, US PPI data eyed

GBP/USD recovers above the 1.2600 psychological mark on Friday amid the USD weakness.
US Retail Sales came in weaker than expected, dropping 0.8% MoM in January from a 0.4% rise in December.
The UK economy entered a technical recession following two consecutive quarters of negative GDP growth.

Lallalit Srijandorn FXStreet

The GBP/USD pair manages to hold above the key 100-day Exponential Moving Average (EMA) of 1.2580 during the early Asian session on Friday. The recovery of the major pair is bolstered by weaker-than-expected US Retail Sales, which drag the USD Index (DXY) lower. Investors will shift their attention to the UK Retail Sales and US Producer Price Index (PPI), due later in the day. At press time, GBP/USD is trading at 1.2600, adding 0.04% on the day.

On Thursday, US Retail Sales dropped 0.8% MoM in January from a 0.4% rise in December, worse than the market expectation of a 0.1% decline. Retail Sales Control Group came in at -0.4% MoM versus 0.6% prior. The downbeat Retail Sales data raise hope that the Federal Reserve (Fed) will soon start cutting interest rates in the coming months. This, in turn, exerts some selling pressure on the Greenback and acts as a tailwind for the GBP/USD pair. Furthermore, the New York Empire State Manufacturing Index arrived at -2.4 in February, a big improvement from the previous reading of -43.7.

On the British Pound front, the UK economy entered a technical recession following two consecutive quarters of negative GDP growth. The quarterly Gross Domestic Product (GDP) for the fourth quarter (Q4) of 2023 was -0.3% from the previous quarter of 0.1% contraction. The year-on-year GDP growth number for Q4 2023 was -0.2% from the previous reading of 0.2% expansion and below market expectations of 0.1%, according to the Office for National Statistics.

The report triggered speculation about whether the Bank of England (BoE) may consider cutting interest rates sooner than this summer. The BoE policymaker Catharine L. Mann said on Thursday that the recent GDP data indicates that the second half of 2023 had a soft patch. Mann further stated that the central bank needs at least one more set of inflation data before deciding its next moves.

Looking ahead, the UK January Retail Sales and US Producer Price Index (PPI) will be due. Fed's Barr and Daly along with BoE's Pill are set to speak later on Friday. Traders will take cues from these events and find trading opportunities around the GBP/USD pair.

GBP/USD

Overview
Today last price	1.2602
Today Daily Change	0.0038
Today Daily Change %	0.30
Today daily open	1.2564

Trends
Daily SMA20	1.2659
Daily SMA50	1.2675
Daily SMA100	1.25
Daily SMA200	1.2564

Levels
Previous Daily High	1.2611
Previous Daily Low	1.2536
Previous Weekly High	1.2643
Previous Weekly Low	1.2518
Previous Monthly High	1.2786
Previous Monthly Low	1.2597
Daily Fibonacci 38.2%	1.2565
Daily Fibonacci 61.8%	1.2582
Daily Pivot Point S1	1.2529
Daily Pivot Point S2	1.2495
Daily Pivot Point S3	1.2454
Daily Pivot Point R1	1.2605
Daily Pivot Point R2	1.2646
Daily Pivot Point R3	1.268

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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