The GBP/USD pair reversed a mid-European session dip below mid-1.3200s and jumped back to session tops after slightly disappointing US macro data.
The US Dollar turned sharply lower after the latest inflation figures and monthly retail sales missed consensus estimates. Following a contraction in August (worst since Jan, 2016), September retail sales rebound the most since March 2015, but still fell short of consensus estimates.
US: Retail sales for Sep 2017 were $483.9 billion, an increase of 1.6% from the previous month
Adding to the disappointment, consumer inflation, as measured by headline CPI, also missed market expectations, with core CPI still below the Fed's medium-term target of 2.0% for the sixth consecutive month.
US: CPI for all items increases 0.5% in September as gasoline index rises sharply
Today's data might have dampened for additional Fed rate hike moves beyond December meeting and the same is evident from a sharp slump in the US Treasury bond yields, which was eventually seen weighing heavily on the greenback and lifted the pair back above the 1.3300 handle.
Next on tap would be the release of Prelim UoM Consumer Sentiment Index, which along with Fedspeaks would now be looked upon for some immediate respite for the USD bulls.
Technical outlook
Valeria Bednarik, Chief Analyst at FXStreet writes: “The 4 hours chart shows that the price is also developing above a bullish 20 SMA that aims to surpass a horizontal 200 EMA, both around 1.3215. In the same chart, technical indicators have lost their upward strength, but hold within positive territory, also indicating limited downward potential. The upside will be open if US data comes worst-than-expected, with scope then to extend its advance up to the 1.3380/1.3400 region.”
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