- 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
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.