GBP/USD rises to 1-week high ahead of UK retail sales, BOE
- USD’s plummets as markets turn risk-averse expecting bears to dominate global monetary policy.
- UK Retail Sales, BOE and political plays at home will direct near-term trade sentiment.
With the US Dollar’s (USD) across the board slump offering additional strength to rest of the major currencies, the GBP/USD pair extended the previous rise towards one week high of 1.2690 ahead of the London open. Traders may now watch over May month Retail Sales from the UK and the BOE’s monetary policy decision, while simultaneously observing British politics, for fresh impulse.
Not only FOMC’s refrain from signaling monetary policy “patience” but a downward revision to inflation forecast and fresh dot-plot inflated chances of a rate cut from the US central bank. With this, it joined rest of the central bankers who are on the bearish stand citing challenges to global economic growth.
Adding to the FOMC-led declines of the USD could be the latest risk aversion wave that dragged the US 10-year treasury yields to sub-2.0% level for the first time since November 2016.
On the other hand, the British Pound (GBP) benefited from receding political uncertainty at home as the front runner Boris Johnson comes closer to being the UK Prime Minister.
Retail Sales, the key to British GDP, may contract -0.5% from 0.0% on a monthly basis while likely citing 2.7% growth versus 5.2% prior on YoY format.
The Bank of England (BOE) is expected to keep its monetary policy intact but might not avoid joining the bear chorus of global central banks sometime during later 2019.
At the political front, the final round of Tory-voting will deliver 2 candidates for the British PM today. During next week's postal votes will be called from rest of the conservatives, around 160,000.
The US has fewer catalysts remaining than the Initial Jobless Claims and the Philadelphia Fed Manufacturing Survey result. The Jobless Claims might soften to 220K from 222K during the week ended on June 14 while the manufacturing gauge could decline to 11.0 from 16.6 previous readouts.
Technical Analysis
With its sustained trading above the 21-day simple moving average (SMA), month’s high around 1.2765 and 50-day SMA level of 1.2830 will be next on the bull’s radar. Alternatively, a downside break of 1.2660 can drag the quote towards 1.2610 and then to 1.2580 numbers to the south.
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
