Gbpusd faces pressure as uk retail sales dip and us economic events loom

GBPUSD Analysis

Performance after Monday
Period	Pct	Chg	Momentum
Monday	-0.18%	-22.6 Pips
Week to-date	-0.11%	-14 Pips
February	-0.48%	-60.1 Pips

Upcoming key events (London Time)

Tue 03:00 PM USD Federal Reserve Chair Jerome Powell testifies
Wed 01:30 PM USD CPI Inflation Rate (12-mth)
Wed 01:30 PM USD CPI Inflation Rate excluding Food and Energy sectors (12-mth)

What happened lately

The UK has recently observed a slight decline in its retail sector performance. The BRC Like-For-Like Retail Sales, which is a measurement of the year-on-year changes in retail sales data, decreased to 2.5% in January from 3.1% in December. This suggests a sluggish momentum in consumer spending, which is a vital component of the UK’s economic activity. Such a decline may reflect a cautious consumer base, possibly due to economic uncertainties or reduced consumer confidence.

In the US, significant economic events are on the horizon that may have implications on the market. Federal Reserve Chair Jerome Powell is scheduled to testify on Tuesday at 3:00 PM, which is a key event as his statements could provide insights into the Fed’s future monetary policy direction. On Wednesday, the highly anticipated CPI Inflation Rate report for the 12-month period is due. This report, which includes rates both with and without the volatile food and energy sectors, will offer crucial data regarding inflationary pressures in the US economy. Strong CPI data could bolster expectations for further interest rate hikes by the Federal Reserve, while weaker data might ease those concerns.

For the GBPUSD currency pair, several factors from both the UK and the US sides are in play. The drop in the UK’s retail sales data indicates a potential weakening in consumer economic activity, which could weigh negatively on the British Pound. Concurrently, the pair’s consolidation and slight drop on Monday to 1.23665 suggest that market participants are cautious and possibly pricing in forthcoming US economic data and Fed Chair Powell’s testimony. Depending on the data release and testimony outcomes, there could be significant volatility ahead. Hence, the GBPUSD pair could experience pressure if US inflation data surprises on the upside, which might lead to a stronger US Dollar due to anticipated Fed tightening. Conversely, subdued inflation figures or dovish comments from Powell could provide some relief to the pair, potentially supporting the Pound against the Dollar.

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What can we expect from GBPUSD today?

GBPUSD on Monday dropped -0.18% to 1.23665. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for GBPUSD looks mixed as the pair is likely to consolidate above 1.23443 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 1.24220 or trades above daily pivot 1.23832. Break above could target R1 at 1.24053. While to the downside, we are looking at 1.23443 (S1) and daily low of 1.23610 as support levels. GBPUSD need to break on either side to indicate a short-term bias. A close below 1.23610 would indicate selling pressure.

For the week to-date, take note that GBPUSD is mixed as compared to the prior week.

Key levels to watch out:

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