• GBP/USD is set to finish the week with more than 1.50% losses, ahead of BoE’s and Fed decisions.
  • The University of Michigan Consumer Sentiment improved vs. the last month’s reading, while inflation expectations slid.
  • UK Retail Sales added to Britain’s recession worries amidst a change of government.

The British pound trims its earlier losses against the greenback after hitting a 37-year low around 1.1350, and recovers the 1.1400 thresholds after registering weaker-than-estimated retail sales, fueled speculations of the UK’s tapping into a recession. At the time of writing, the GBP/USD is trading at 1.1395, below its opening price, by 0.62%.

A risk-off impulse keeps most G8 currencies heavy. The greenback pared some earlier losses, as shown by the US Dollar Index, almost flat at around 109.704, yet still 0.04% down. US economic data released by the University of Michigan showed that US consumers remain slightly upbeat regarding the US economy. The Consumer Sentiment in September rose to 59.5, below estimates by a notch but better than the 58.6 achieved in August.

Joanne Hsu, director of the UoM Survey, said, “After the marked improvement in sentiment in August, consumers showed signs of uncertainty over the trajectory of the economy.” Inflation expectations in the same report for 1-year dropped to 4.6% vs. 4,8% in August.

In the meantime, US economic data released in September further cements the case for a Federal Reserve’s 75 bps rate hike in the next week. Also, sources quoted by Bloomberg commented that the US central bank might hike by a large size in November.

Elsewhere, the UK docket revealed that retail sales in August tumbled more than the estimated 0.5% contraction, falling 1.6% MoM, adding to recession fears amidst a tightening cycle by the Bank of England.

In the meantime, UK’s Prime Minister Liz Truss announced last week an energy bill that will put a lid on energy prices for two years, which would likely cost about 100 billion pounds.

What to watch

The UK economic docket will feature the Bank of England’s monetary policy decision next week. Money market futures expect a 50 bps hike, but pressures are mounting that the central bank could go 75 bps. The Federal Reserve is expected to raise rates by 75 bps on the US front, with minimal chances of going a full percentage point.

GBP/USD Key Technical Levels

GBP/USD

Overview
Today last price 1.1395
Today Daily Change -0.0062
Today Daily Change % -0.54
Today daily open 1.1466
 
Trends
Daily SMA20 1.1634
Daily SMA50 1.1884
Daily SMA100 1.2118
Daily SMA200 1.2713
 
Levels
Previous Daily High 1.1556
Previous Daily Low 1.1462
Previous Weekly High 1.1648
Previous Weekly Low 1.1405
Previous Monthly High 1.2294
Previous Monthly Low 1.1599
Daily Fibonacci 38.2% 1.1498
Daily Fibonacci 61.8% 1.152
Daily Pivot Point S1 1.1433
Daily Pivot Point S2 1.14
Daily Pivot Point S3 1.1338
Daily Pivot Point R1 1.1527
Daily Pivot Point R2 1.1589
Daily Pivot Point R3 1.1622

 

 

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