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GBP/USD recovers few pips from sub-1.1200 levels, still down nearly 1% for the day

  • A combination of factors prompts aggressive selling around GBP/USD on Friday.
  • The UK political development weighs on sterling amid resurgent USD demand.
  • The mixed US Retail Sales report does little to provide any meaningful impetus.

The GBP/USD pair come under aggressive selling pressure on Friday and snaps a two-day winning streak to a one-week high touched the previous day. The intraday downfall is sponsored by a combination of factors, though spot prices show some resilience below the 1.1200 round-figure mark.

The British pound is pressured by the latest UK political developments, wherein reports confirmed that finance minister Kwasi Kwarteng has been sacked, making him the shortest-serving chancellor since 1970. This comes amid the emergence of aggressive US dollar buying, which, in turn, is seen exerting downward pressure on the GBP/USD pair.

The stronger US consumer inflation figures released on Thursday reaffirmed market expectations that the Fed will continue to tighten its monetary policy at a faster pace. In fact, the fed fund futures indicate a greater chance of another supersized 75 bps rate hike at the next FOMC meeting in November, which is seen underpinning the greenback.

The USD sticks to its strong intraday gains and seems unaffected by mixed US monthly Retail Sales data. The US Census Bureau reported that the headline sales were flat MoM in September, missing estimates, while sales excluding autos unexpectedly climbed by 0.1%. Furthermore, the previous month's readings were also revised slightly higher.

That said, retreating US Treasury bond yields, along with signs of stability in the equity markets, hold back the USD bulls from placing aggressive bets. This, in turn, offers some support to the GBP/USD pair, at least for the time being. Traders now look to the Prelim Michigan US Consumer Sentiment and Inflation Expectations Index for a fresh impetus.

Technical levels to watch

GBP/USD

Overview
Today last price1.1206
Today Daily Change-0.0118
Today Daily Change %-1.04
Today daily open1.1324
 
Trends
Daily SMA201.1151
Daily SMA501.1532
Daily SMA1001.1862
Daily SMA2001.249
 
Levels
Previous Daily High1.1381
Previous Daily Low1.1058
Previous Weekly High1.1496
Previous Weekly Low1.1055
Previous Monthly High1.1738
Previous Monthly Low1.0339
Daily Fibonacci 38.2%1.1257
Daily Fibonacci 61.8%1.1181
Daily Pivot Point S11.1127
Daily Pivot Point S21.0931
Daily Pivot Point S31.0804
Daily Pivot Point R11.1451
Daily Pivot Point R21.1577
Daily Pivot Point R31.1774

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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