- GBP/USD gained some positive traction on Friday amid a broad-based USD weakness.
- The uptick met with a fresh supply in reaction to disappointing UK Retail Sales figures.
- The Fed’s hawkish outlook should underpin the USD and cap the upside for the major.
The GBP/USD pair trimmed a part of its intraday gains and retreated to the 1.3200 round-figure mark in reaction to weaker UK macro data.
The pair gained some positive traction during the early part of the trading on Friday and was supported by modest US dollar weakness, though bulls struggled to capitalize on the move. The uptick, however, lacked bullish conviction and ran out of steam near the 1.3225 region. The Bank of England's softer view on the need for further rate hikes turned out to be a key factor that acted as a headwind for the British pound.
The intraday pullback gathered some momentum following the disappointing release of the UK Retail Sales figures, which fell 0.3% in February. This was below market expectations for modest growth of 0.6% and marked a sharp deceleration from the 1.9% rise reported in January. Adding to this, sales excluding fuel declined by 0.7% during the reported month as against the 1.7% growth recorded in January and the 0.5% rise anticipated.
That said, a generally positive risk tone continued undermining the safe-haven US dollar and extended some support to the GBP/USD pair, at least for the time being. The Fed's more hawkish outlook, however, should help limit deeper losses for the buck. This, in turn, suggests that the path of least resistance for spot prices is to the downside. Hence, any positive move is more likely to get sold into and fizzle out rather quickly.
Technical levels to watch
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