UK Retail Sales Jump
The Pound is trading a little higher today on the back of an upside surprise in the latest UK economic data. Retail sales were seen at 0.3% last month, much higher than the -0.4% forecast. The data is the latest in a string of readings which have beaten expectations recently including a better August GDP reading and a lower unemployment rate over the last 3-month period. While inflation was seen dropping below forecasts (and the BOE’s 2% target) last month, the general tone to UK data has been encouraging, helping keep the Pound supported here.
BOE Vs Fed
Looking ahead, the BOE is widely expected to cut rates again when it meets next month, on the back of the recent drop in inflation. A further cut is also projected for December. However, with data proving resilient, there are risks to this outlook. If the BOE cuts in November but takes a less dovish tone, this could prevent GBP from breaking down as expected. Ultimately, the question for GBPUSD traders over the remainder of the year is; who will be more dovish, the BOE or the Fed?
Fed Expectations
The Fed has recently waled back from the market’s more dovish expectations a month ago, with pricing for larger .5% now virtually disappeared. If the Fed gives a more neutral outlook when it meets next month, and the BOE focuses on the sharp drop in inflation, we could still see GBPUSD grinding lower over Q4.
Technical Views
GBPUSD
The sell off in GBPUSD has stalled for now into the 1.30 level. With momentum studies still bearish, however, risks remain skewed towards further downside. Below current support, the bull trend line and 1.2832 level will be the next areas to watch. Topside, bulls need to get back above 1.3136 to alleviate bearish pressure.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.