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.

Haresh Menghani FXStreet

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 price	1.1206
Today Daily Change	-0.0118
Today Daily Change %	-1.04
Today daily open	1.1324

Trends
Daily SMA20	1.1151
Daily SMA50	1.1532
Daily SMA100	1.1862
Daily SMA200	1.249

Levels
Previous Daily High	1.1381
Previous Daily Low	1.1058
Previous Weekly High	1.1496
Previous Weekly Low	1.1055
Previous Monthly High	1.1738
Previous Monthly Low	1.0339
Daily Fibonacci 38.2%	1.1257
Daily Fibonacci 61.8%	1.1181
Daily Pivot Point S1	1.1127
Daily Pivot Point S2	1.0931
Daily Pivot Point S3	1.0804
Daily Pivot Point R1	1.1451
Daily Pivot Point R2	1.1577
Daily Pivot Point R3	1.1774

Author

Haresh Menghani

FXStreet

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

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