Gbpusd drops as US economic data show declining industrial production and retail trade

GBPUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	-1.11%	-151.2 Pips
Week to-date	-1.07%	-145.3 Pips
June	-0.2%	-26.3 Pips

Upcoming key events (London Time)

Wed 07:00 AM GBP Consumer Prices Index (CPI) (12-mth)
Wed 07:00 PM USD Fed Interest Rate Decision (Federal Funds Rate)
Wed 07:00 PM USD FOMC Economic Projections
Wed 07:00 PM USD Interest Rate Projections
Thu 12:00 PM GBP Bank of England Interest Rate Decision (Bank Rate)

What happened lately

In the United States, recent economic data reveals a contraction in industrial production and retail trade for May 2025. U.S. Industrial Production decreased by 0.2%, reflecting a slowdown from a stagnant output in April. The Monthly Retail Trade figures also fell significantly, showing a 0.9% decline, which is a marked drop from the revised -0.1% in April and an even steeper drop from the initially reported 0.1%. Such a downturn suggests a weakening consumer demand as retail transactions plateau. On a positive note, the Retail Trade Control Group managed to post a 0.4% increase, highlighting some resilience in core retail sectors despite broader declines. However, the monthly retail trade excluding automobiles witnessed a reduction of 0.3%, casting a shadow over consumer spending patterns. Furthermore, the New York Empire State Manufacturing Index plunged to -16 points in June, deteriorating from May’s -9.2 points, which indicates continuing challenges in the manufacturing sector.

The recent data points from the United States have placed downward pressure on the GBPUSD exchange rate, which dropped by 1.11% to 1.34219. The downtrend in American industrial and retail sectors suggests that economic momentum is losing steam, potentially weakening the dollar further. This comes ahead of crucial announcements like the Federal Reserve’s interest rate decision, FOMC economic projections, and the Bank of England’s interest rate decision, which will provide further direction for the currency pair. If the Federal Reserve moves to cut rates or signals a dovish outlook, the USD could weaken, potentially leading to a rebound in GBPUSD. Conversely, any signs of strength in the U.S. economy or hints of monetary tightening could bolster the dollar, putting more pressure on sterling. Upcoming UK Consumer Price Index figures and the Bank of England’s decision could also impact the pound, influencing monetary policy expectations and driving fluctuations in the GBPUSD. These events hold significant potential to move markets and should be closely monitored for a clearer trajectory of the currency pair.

Latest from X (Twitter)

Tweets by Office for National Statistics

What can we expect from GBPUSD today?

GBPUSD on Tuesday dropped -1.11% to 1.34219. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for GBPUSD looks bearish as the pair posted lower in Tuesday trading session.

Looking ahead for the day, immediate support level is at S1 1.33648 with break below could see further selling pressure towards S2 at 1.33077. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.35794 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.34150 would indicate selling pressure.

For the week to-date, take note that GBPUSD is bearish as the pair posted lower by -1.07%.

Key levels to watch out:

#GBPUSD Trending on Twitter

[custom-twitter-feeds hashtag=”#GBPUSD” num=3 showheader=false]